Preamble

[MR.SPEAKER in the Chair.]

PRIVATE BUSINESS

KENT ELECTRIC POWER BILL (By Order)

Second Reading deferred until the next Sitting Day.

LONDON COUNTY COUNCIL (MONEY) BILL.

"to regulate the expenditure on capital account and lending of money by the London County Council during the financial period from the first day of April one thousand nine hundred and forty-one to the thirtieth day of September one thousand nine hundred and forty-two and for other purposes," presented;

Read the First time, and referred to the Examiners of Petitions for Private Bills.

Oral Answers to Questions — CHINA (JAPANESE TRADE CONTROL).

Mr. Hannah: asked the Secretary of State for Foreign Affairs (I) whether it is possible for a British firm with branches at Tientsin and Shanghai to transfer goods from stocks at one branch to the other without Japanese permission;
(2)whether he is aware that the Japanese Federal Reserve Bank in North China have prepared forms for distribution to foreign importers on which they are required to give details of their monthly importations of certain classes of merchandise from 1st June, 1939,to 31st July,1940; with full particulars as to quantity and price; whether such forms have been sent out to all the foreign chambers of commerce for distribution among their nationals; and by what right the Japanese claim to have access to this confidential information?

The Secretary of State for Foreign Affairs (Mr. Eden): The Federal Reserve Bank in North China has prepared a form requiring details of certain importations from June, 1939,to June,1940. Importers obtain these forms direct and submit them for attestation to their national chamber of commerce. Import and export permits issued by the Federal Reserve

Bank are required for goods passing into and out of Tientsin. This is the case even if the goods in question belong to a branch of the same firm in Shanghai.As I stated in answer to my hon. Friend the Member for Stourbridge (Mr. R. Morgan) on 12th February last, repeated representations against trade and exchange restrictions in North China have been made by His Majesty's Government, but so far without satisfactory result.

Mr. Hannah: Will these representations continue to be made?

Mr.Eden: I am having a review of a number of these questions, and propose to take them up collectively.

Oral Answers to Questions — Mr. MATSUOKA (EUROPEAN VISIT).

Commander Bower: asked the Secretary of State for Foreign Affairs whether Mr. Matsuoka received an invitation from His Majesty's Government to visit this country during his recent visit to Europe?

Mr. Eden: No, Sir. My hon. Friend will no doubt have seen the Japanese Foreign Minister's statements to the Press about the purpose of his journey to Europe.

Commander Bower: Is the right hon. Gentleman satisfied that Mr. Matsuoka is obtaining enough and not too much information about our war effort through the medium of the Japanese Ambassador?

Mr. Eden: I cannot answer for ambassadorial functions. I feel sure that the Japanese Ambassador here discharges his task.

Oral Answers to Questions — ROYAL AIR FORCE.

COMMISSIONS.

Mr. Mathers: asked the Secretary of State for Air whether he is aware that applicants for commissioned rank in interviewing their commanding officers have to do so in the presence of a non-commissioned officer; and whether he will arrange that such interviews shall take place in private?

The Secretary of State for Air (Sir Archibald Sinclair): The presence of an N.C.O. at an interview between an airman and his commanding officer is entirely a matter for the latter's discretion,


and I do not consider that it would be desirable to place any restriction on the exercise of that discretion.

Sir. Mathers: Does not the right hon. Gentleman realise that this takes away from the confidential nature of the interview? I am sure he wants it to be confidential, and if there has to be someone else present, might it not be someone who is not in immediate contact with the colleagues of the man who is seeking the interview?

Sir A. Sinclair: I do not think it is for me to dictate to commanding officers how to conduct their interviews. If a commanding officer is not fit to conduct an interview, he is not fit to be a commanding officer.

PIGEONS.

Mr. Mander: asked the Secretary of State for Air the number of pigeons from the United States of America accepted for use overseas, and the countries in which they are going to be used?

Sir A. Sinclair: It would not be in the public interest to give the information asked for by my hon. Friend.

Mr. Mander: Will my right hon. Friend bear in mind that there are vast numbers of pigeons in this country which will have to be slaughtered because of the present restrictions as regards feeding-stuffs, and will he see that these birds have the preference wherever possible?

Sir William Davison: Will my right hon. Friend speak to his colleagues about the pigeons in London, which are doing a great deal of harm to allotments and other things, and ought to be done away with?

Mr. Mathers: Are not the pigeons referred to in the Question more valuable to the national effort than race-horses?

SEPARATED WIVES (ALLOWANCE).

Miss Eleanor Rathbone: asked the Secretary of State for Air whether he will make a full statement showing the position of a separated wife regarding her claim to a separation allowance for herself and the children of an airman in her charge, distinguishing between cases where the wife has received an allowance from the airman before his enlistment under a main-

tenance order or a judicial separation or by informal agreement, or is entitled to such an allowance under maintenance order or judicial separation, and has made reasonable efforts to secure its payment without success, and, further, showing how the claim will be affected if an allowance is also claimed by a woman living with the airman as his concubine?

Major Sir James Edmondson (Vice-Chamberlain of the Household): I have been asked to reply. The provision made for separated wives under Royal Air Force Regulations is the same as that made under Army Regulations. My right hon. Friend would, therefore, refer my hon. Friend to the reply on this subject given yesterday by my right hon. and gallant Friend the Secretary of State for War.

Oral Answers to Questions — TRANSPORT.

PRIVATE MOTORCARS (REGISTRATIONS).

Mr A. Edwards: asked the Minister of Transport whether he is able to account for the large increase in the registrations of private motor-cars during the last year; and whether he proposes to introduce any restriction?

The Minister of Transport (Lieut.-Colonel Moore-Brabazon): It would not be in the public interest to give the figures for which my hon. Friend asks.

Mr. Edwards: Is the right hon. and gallant Gentleman not aware of a statement made in the House recently to the effect that 77,000 extra private cars had been licensed last year?

Lieut.-Colonel Moore-Brabazon: That is a question of licensing. If I gave my hon. Friend figures regarding registrations, it would be a reflex of the productive capacity of the country. If he will ask about licensing, I will give him information on that subject.

Mr. Robert Gibson: Will the right hon. and gallant Gentleman observe that he is not asked for figures, but for the reason for the increase, and can he answer that question?

Lieut.-Colonel Moore-Brabazon: There has been no increase, but a big decrease in registration.

Mr. Leach: Has the right hon. and gallant Gentleman not now arrived at the conclusion that pleasure motoring ought to be abolished?

Lieut.-Colonel Moore-Brabazon: No, Sir.

ROAD LABOUR.

Mr. Lyons: asked the Minister of Transport what result has been reached to date in response to his urge to highway authorities for the release for agricultural work of unnecessary road labour; and what is the figure released?

Lieut.-Colonel Moore-Brabazon: The arrangements for release of roadmen for agriculture are made direct with county councils by county war agricultural executive committees, in consultation with the local representatives of the Minister of Labour and National Service, and the information asked for by my hon. and learned Friend is not available in my Department.

Mr Lyons: In view of the fact that he said about a week ago that he had circularised local authorities bringing home this point, is it too much to ask whether the right hon. and gallant Gentleman will be satisfied with having no answer to his invitation for co-operation?

Lieut.-Colonel Moore-Brabazon: I have never noticed that the Minister for Agriculture is backward in coming forward on points of this kind. As the House knows I have already had indications by questions showing that the neglect of roads is having an effect upon transport.

MINERS' TRAVELLING EXPENSES

Mr. Tinker: asked the Secretary for Mines whether he is aware that many miners have to travel long distances to the colliery from their homes; that this means a reduced wage because of the fares they have to pay; and, seeing munition workers are granted a remittance of travelling expenses, will he examine the position and try and get the miners on a similar basis?

The Secretary for Mines (Mr. David Grenfell): It is true that many miners have to travel at their own expense by train or road transport to the pit where they are employed. Arrangements have been made in special cases to assist them by providing bus services, for which they have been charged the ordinary fare.

The Ministry of Labour has found it necessary to give allowances to assist munition workers to travel to certain new factories at a distance from their homes. The question of allowances to help miners in special circumstances has been raised by the workmen's organisation, and I regret I am not in a position to state whether any concessions have been given as a result of local negotiations.

Mr Tinker: As the Minister is aware, miners come under the Essential Works Order. Seeing that they have been put in that position, are they not entitled to some recompense for the money they have to spend in travelling, which in some cases amounts to 3s.or 4s.a week?

Mr. Grenfell: I do not think that it is, in the first place, a matter for my Department; it is a matter for the men themselves.

Mr. R. Gibson: Could my hon. Friend see that this expenditure is allowed for Income Tax purposes?

Mr. Grenfell: I do not think that it can be taken into consideration for that purpose..

Mr. Tinker: I do not suggest that this is a matter for the Mines Department, but I suggest that the Minister should approach other Departments to get the matter put right.

Mr. Grenfell: No, I think it is a matter for the men in the areas affected to make the first application. In some districts men have been paying high fares for years to go to work.

Oral Answers to Questions — MINISTRY OF INFORMATION.

STAFF.

Captain Cunningham-Reid: asked the Minister of Information how many of the 50 senior officers of the Ministry were previously heads of important publicity organisations, or managing directors or editors of any of our most widely-read national newspapers?

The Minister of Information (Mr. Duff Cooper): Nine, Sir.

Captain Cunningham-Reid: Why do we not obtain the services of more men better qualified for this important job?

Mr. Cooper: We have obtained the services of the people who, we think, are best qualified.

FALSE ENEMY REPORTS.

Commander Bower: asked the Minister of Information whether he is aware that German reports to the effect that the British were withdrawing from Greece, that the Admiralty had ordered the Greek navy to escort the withdrawing transports, and other false reports were widely circulated by the German and German-occupied wireless stations, and remained uncontradicted by our wireless for nearly 24 hours, with the result that they gained widespread credence abroad; and whether he will state the reason for the delay in countering these damaging falsehoods?

Mr. Cooper: I am aware that at the beginning of last week the Germans circulated numerous reports from a variety of sources to the effect that Imperial Forces were evacuating Greece. I am not aware that such reports gained widespread credence abroad. They were rapidly disproved by the fighting that followed. It would be a mistake to issue an official denial of every false report which the enemy put into circulation, since if we were to do so the lack of a denial would be taken as confirmation.

Commander Bower: Is there not considerable evidence that these particular reports did gain credence, and in fact took in a very prominent American journalist in Ankara who is by no means noted for his pro-Axis leanings?

Mr. Cooper: I do not think they gained widespread credence. It is impossible to gauge the reliability placed upon them by individuals.

BROADCAST NEWS (LIBYA).

Sir Leonard Lyle: asked the Minister of Information whether he will re-investigate the news on Libya recently issued by the British Broadcasting Corporation to see how much of it has proved to be misleading?

Mr. Cooper: I do not think any useful purpose would be served by the investigation suggested by the hon. Member. I am satisfied that the B.B.C. have done their best to provide an accurate account of events from the material at their disposal.

Sir L. Lyle: Does not my right hon. Friend agree that the news as presented did not in fact give an accurate picture of the situation, and also that it was stale when it was given?

Mr. Cooper: The question of its freshness depends, of course, on the sources from which it springs, and it is not in our power to expedite its delivery. It is purely a matter of opinion as to how far the news as given out represented the facts; I do not think it seriously misrepresented them.

MEETINGS (MEMBERS' CONSTITUENCIES).

Mr. Vernon Bartlett: asked the Minister of Information whether his Department admits the right of a Member of Parliament to prevent the holding of any meetings in his constituency, even though an all-party local information committee recommends that such meetings should be held?

Mr. Cooper: No Member of Parliament has either the right or the power to prevent the holding of meetings in his constituency, but in my view it is undesirable that the Ministry of Information should organise meetings at the public expense in a constituency against the expressed wishes of the sitting Member.

Mr. Bartlett: Is the Minister aware that every one of his Regional Committees—and I think they are 10 in number in England—have voted unanimously in most cases against this regulation? In view of the great misunderstanding throughout the country about for example, the inevitability of our intervention in Greece, will he not reconsider these regulations?

Mr. Cooper: I am not aware that the Regional Committees have taken any action of the kind. They are not there to criticise the policy of the Ministry, but to carry it out. I have expressed the view I take, that I would not myself go into a colleague's constituency and hold a meeting against his wishes, and therefore I do not think I ought to arrange such meetings.

Mr. Thorne: Is it the Minister's intention to stop public meetings?

Mr. Cooper: indicated dissent.

Oral Answers to Questions — FOOD SUPPLIES.

ROYAL PARKS (CULTIVATION).

Mr. Tinker: asked the Parliamentary Secretary to the Ministry of Works and Buildings whether he is in a position to state how much land in the Royal Parks is now under cultivation to grow foodstuffs; and whether he will say what plans he has in mind to extend further cultivation for this purpose?

The Parliamentary Secretary to the Ministry of Works and Buildings (Mr. Hicks): Approximately 320 acres have, in consultation with the Ministry of Agriculture, been placed under cultivation for growing foodstuffs. Having regard to numerous other war-time encroachments, and the great importance of maintaining the Royal Parks as open spaces for the pleasure and recreation of the public, it is not proposed to extend this area.

Mr. Tinker: Does not the hon. Gentleman agree that the Royal Parks could do no better service for the nation than that of growing foodstuffs, and will he not extend the land available, because I can assure him from my own observation that it would be very much appreciated?

Mr. Hicks: The only answer I can give my hon. Friend is that careful consideration has been given to the question of releasing land for cropping and allotments, but that there are limits to the extent to which it can be so used. In quite a lot of the parks there are trees, walks, water and pleasure grounds, and I think the acreage which has been granted represents quite a substantial proportion.

CHEESE RATIONING.

Mr. De la Bére: asked the Parliamentary Secretary to the Ministry of Food whether, in connection with the cheese ration for agricultural workers, he will put on the same footing with the agricultural workers the market gardeners who are small master men; and, to prevent the abuse of such extension of this scheme, only make it applicable in the case of a small market gardener employing no paid labour, who should be regarded as being in the same category as a labourer; and whether he will favourably consider granting this extra ration by means of an application form with a declaration by the applicant, endorsed by a qualified person, such as is done in the case of the National Milk Scheme?

The Parliamentary Secretary to the Ministry of Food (Major Lloyd George): No, Sir, my Noble Friend does not see his way to extend the special ration in the manner suggested by my hon. Friend. I would refer, in this connection, to the reply which I gave to Questions on this subject on 2nd April.

Mr. De la Bére: Does not my hon. and gallant Friend appreciate that small master men are entitled to the same consideration as the agricultural workers, more especially as they provide a great amount of food for the national larder and are quite indispensable if we are to get the best results in this country? Will he give the matter further thought, because I know he is really sympathetic?

Mr. Price: Can the hon. and gallant Gentleman say on what basis the allocation is being made? Is it on the basis of insurance cards or on the basis of whether or not a person lives near his work or has to travel long distances?

Major Lloyd George: When one makes this sort of arrangement there has to be a rough and ready basis, and we thought that the simplest method in regard to agricultural workers was the insurance card basis.

Sir Joseph Nall: Is it not most unfair to real smallholders? It is inviting smallholders to get round the silly regulation by employing each other.

Major Lloyd George: I do not see what hardship there is to the smallholder. The fact that he is a smallholder shows that he cannot be very far from home. I do not see that they are suffering any real hardship.

Mr. Woodburn: asked the Parliamentary Secretary to the Ministry of Food whether he can arrange to add railway-men to the other categories eligible for a special cheese allowance as their duties require absence from home and inaccessibility to canteens or other food services?

Major Lloyd George: I have nothing to, add to the answer which I gave on this subject to my hon. Friend the Member for the Isle of Ely (Mr. de Rothschild) on 2nd April.

Mr. Woodburn: Is the Minister aware that men working on the railway have to


be away from home and that there is no possibility of access to canteens or any other method of obtaining food? Is it not important that this concession should be extended to railwaymen?

Major Lloyd George: As mentioned in a previous reply, consideration is being given to the matter.

Mr. George Griffiths: Is the hon. and gallant Gentleman aware of the great dissatisfaction among surface mine-workers? They work as hard on the top as do men below, and will he see that they, too, get a supply of cheese?

Major Lloyd George: On all these matters we consider the position of the men after advice from their representatives.

Mr. Griffiths: Will the Parliamentary Secretary consult me, because I can give him advice?

Commander Bower: asked the Parliamentary Secretary to the Ministry of Food whether he is aware that the difference in the cheese ration allotted to men occupied in heavy work, who may be working or residing alongside one another, such as agricultural and forestry workers, or miners and steelworkers, is causing grave dissatisfaction; and whether he will take steps to make the distribution more equitable?

Major Lloyd George: The higher ration of cheese is not allotted to men by reason of their being employed on heavy work, but is to meet the special cases of the underground miner and agricultural worker who require to take suitable food to their work. In view of the limited supply of cheese available, my Noble Friend regrets that he is unable at present to sec his way to extend the number pf workers who are eligible for the special ration. The working of the scheme will, however, be kept under constant review.

Commander Bower: Is my hon. and gallant Friend aware that it would be much better if this rationing was allotted on the basis of the habits of the men concerned? It is not only miners who take their food to work. Many categories of steel workers do so, and this scheme inflicts great hardship on them.

Mr. Kenneth Lindsay: Would the hon. and gallant Gentleman reconsider this

matter? There are smallholders and agricultural people on their own, and is not the answer he has given a little bit bureaucratic and wooden, and unlike his usual imaginative replies?

Major Lloyd George: I have never given a wooden answer. The hon. Gentleman will realise that when you are drawing a line, you cannot make it perfect for everyone. You are bound to get strain on both sides, and therefore it is a little difficult. But we are keeping the scheme under constant review, although we are governed largely by the supply position. We are doing everything we possibly can to meet certain definite hardships.

MILK DISTRIBUTION.

Mr. David Adams: asked the Parliamentary Secretary to the Ministry of Food whether he is aware that certain large milk distributors are now delivering milk on six instead of seven days per week to implement the Government order to reduce consumption by one-seventh; and, as this entails the use of milk two to three days old, will he protect consumers by enforcing the customary seven day deliveries?

Major Lloyd George: My Noble Friend has appealed to the milk distributors so to arrange the cut that the general discontinuance of milk distribution on one day of the week is avoided and a daily supply to the public maintained.

Mr. Adams: Is the Parliamentary Secretary aware that consumers generally, unless this be done, will be forced to take milk which is probably unfit for human consumption unless properly bottled? Surely consumers are entitled to select the day on which they will take their short ration?

Major Lloyd George: I think that if the hon. Gentleman reads my answer, he will see that all these points are met.

Sir L. Lyle: asked the Parliamentary Secretary to the Ministry of Food whether he is aware of the chaos prevailing in many districts of the country as a result of the operation of the scheme for the reduction of the milk supply to consumers by one-seventh; under what conditions of this scheme, based on household consumption at a much earlier date arbitrarily selected, additional milk can now be


obtained for fresh evacuees, or visitors or babies, other than by application under the free supply scheme, or by elaborate procedure obviating any immediate remedial action; and whether he will reconsider the whole scheme, basing it on rationing each household at so much milk per day, per person?

Major Lloyd George: The introduction of the scheme for curtailing the consumption of non-priority milk by one-seventh has naturally involved considerable work. My Noble Friend is advised that the scheme is being introduced throughout the country with little disturbance of supply. Dairymen, whose demands for milk have increased since the first week of March, have been informed that they should apply to the Local Regional Officer of the Milk Marketing Board for an appropriate adjustment of their basic quantity. Pending the approval of the Regional Officer to the necessary adjustment, dairymen may supply additional milk for consumption by children temporarily home from boarding school or to new customers moving into their area. I am not satisfied that the adoption of the suggestion contained in the last paragraph of my hon. Friend's Question would result in improved distribution and utilisation of supplies.

Sir L. Lyle: Does not my hon. and gallant Friend agree that the present system, which takes into account neither the number of people in a household nor the number of children in a household, but is based on what happened in one week during March, can never be a success?

Major Lloyd George: My hon. Friend will appreciate that it must be based on some date, and we thought that it would be better to base it on a date which did not give people the opportunity of taking more milk than they normally took. With regard to the number of people in a house, we appreciate the difficulties when people move, and arrangements are being made to overcome them. But when people move into one area some others may move out at the same time.

Mr. Evelyn Walkden: In view of the statement made by the hon. and gallant Gentleman's Noble Friend that he would ration only those goods for which he could ensure a fair distribution, will the Parlia-

mentary Secretary make representations to him to consider the scheme submitted by the trade unions, which, in my opinion, is simple, equitable and just?

Major Lloyd George: Yes, Sir.

FIRE-WATCHERS (RATIONS).

Mr. Mander: asked the Parliamentary Secretary to the Ministry of Food why it has been decided that neither tea nor any other rationed foods shall be used in the supplying of meals to fire-watchers?

Major Lloyd George: As I informed my hon. Friend on 19th March, the general supply situation makes it very difficult to grant any further concessions. The possibility of making some allowance of rationed food in certain cases is however being closely examined.

Mr. Mander: Is my hon. and gallant Friend aware that tea and other rationed goods are allowed at present to roof-spotters and many others engaged on Civil Defence, and is it the intention that fire-watchers should bring their own food rather than have it supplied by the employers?

Major Lloyd George: I said that the possibility of making an allowance is being considered. The hon. Member will be aware that in certain offices allowances of tea have already been made for the people who work in those offices. But again, the whole matter depends upon the supply position.

Mr. Mander: What steps should be taken by those who desire to make application for an extra supply for fire-watchers at the present time?

Major Lloyd George: If my hon. Friend will communicate with me, I will let him know the position.

FISH.

Mr. Parker: asked the Minister of Agriculture whether he proposes to requisition fishing boats not required for Naval use for full-time fishing, with captains and crews salaried by his Ministry; and what other steps he intends to take to cheapen the retail price and increase the supplies of fish?

The Joint Parliamentary Secretary to the Ministry of Agriculture (Mr. T. Williams): My right hon. Friend has noted my hon. Friend's suggestion but docs not,


at present, contemplate such action as is suggested in the first part of the Question. My right hon. Friend the Minister of Food has already fixed maximum prices for Iceland cod, and has under consideration the extension of price control to other varieties of white fish.

Oral Answers to Questions — BRITISH GUIANA.

PETROL RATIONING.

Mr. Mathers: asked the Under-Secretary of State for the Colonies whether he is aware of the harm caused by the imposition of petrol rationing in British Guiana alone amongst West Indian Colonies; and whether he will cause this policy to be reversed?

The Under-Secretary of State for the Colonies (Mr. George Hall): My Noble Friend has already agreed that petrol rationing in British Guiana should be discontinued.

WELFARE WORK.

Mr. Parker: asked the Under-Secretary of State for the Colonies whether he is aware that the need for some welfare schemes in British Guiana has been accentuated by war conditions; and whether the special grants promised from the Imperial Exchequer and the Colonial Development Fund can be made available for this purpose?

Mr. George Hall: In July of last year the Legislative Council of British Guiana unanimously passed a resolution forgoing, as a contribution to the war effort, all assistance from the United Kingdom Exchequer, and no issues were, therefore, made to the Colony from the sum of £350,000 which was provided for such works in the West Indies as could be put in hand forthwith. Schemes were, however, initiated in British Guiana in 1940, the cost being met from the Colony's own resources. In the event of applications being received from the Colony for grants from the Colonial Development and Welfare Vote, they would be sympathetically considered. There is a local Development Trust Fund, the objects of which are the improvement of social conditions and the promotion of agriculture and other industries, and certain schemes are being financed from this Fund

.NIGERIA (FOODSTUFFS)

Mr. Sorensen: asked the Undersecretary of State for the Colonies whether he has taken, or will take, any steps further to secure a sufficient supply of foodstuffs in Nigeria; whether he is also aware that certain essential foodstuffs have risen in price by 100 per cent., and that there are complaints of profiteering; and what steps have been taken to prevent profiteering, and to stabilise prices at a reasonable level?

Mr. George Hall: With a few unimportant exceptions, all foodstuffs required for the population of Nigeria can be and are produced locally, and very active steps have been taken by the Governor of Nigeria to increase that local production. 1 have not had brought to my notice any special difficulties in obtaining such imports as are still necessary. The prices of foodstuffs in the territory have been controlled since early in the war and the formula used for that control is now under revision. If my hon. Friend will communicate to me any complaints he has received regarding either insufficient supplies or profiteering, they will be investigated.

Mr. Sorensen: May I ask the hon. Gentleman whether his statement that the formula is being revised indicates that there has been some complaint regarding high prices?

Mr Hall: No, Sir.

Oral Answers to Questions — BRITISH ARMY.

CAMP CONSTRUCTION.

Mr. Stokes: asked the Secretary of State for War the name of the expert consultant called in to advise on the camp construction; and at what stage in the construction his advice was sought?

The Financial Secretary to the War Office (Mr. Richard Law): If, as I assume, my hon. Friend has in mind the sewage disposal plant referred to in a Question by my hon. Friend the Member for Chislehurst (Sir W. Smithers) on 8th April, the plant was designed and installed in accordance with the recommendations of Mr. G. T. Cotterell, the War Department sanitary adviser, who is one of the leading consultants in the country. As regards the second part of the Question, advice was naturally sought


before the construction of the camp was begun, in accordance with the usual practice.

Mr. Stokes: Did not the Secretary of State say the other day that a special consultant was called in after the work was started? I am asking for the name of that person, not of the original designer.

Mr. Law: I do not recollect the Secretary of State saying that a special consultant was called in after the work was started. I said that a special consultant was advising the War Office on the construction of camps.

Mr. Stokes: asked the Secretary of State for War why the Militia camps at Cove cost £400 per militiaman, compared with £160 per head of persons housed in the London County Council estate at the White City; and whether he is satisfied that the contractors engaged have had fair treatment?

Mr. Law: With regard to the first part of the Question, while I do not accept the figures given by the hon. Member, the comparison which he draws between Cove Camp and the London County Council flats at the White City is of no value, since obviously the problems involved were in no way comparable. As to the second part of the Question, the contractor has been paid in full, except for a small sum which is being held, in the normal way, as retention money and for any fee payable for work done additional to the original contract which is under consideration.

Mr. Stokes: Does not my hon. Friend consider that Militia camps ought to cost less than permanent buildings? Is it not the case that this contractor, without any case having been proved against him, has been placed on a black-list, and that he gets no further contracts?

Mr.Law: The two cases are not in the least comparable. At the White City, the buildings were used purely as dwellings, and they were built on a prepared site, at a time when labour was plentiful. The Cove camp was built on an unprepared site, at a time when labour was scarce, and, therefore, expensive. At the camp there were recreational rooms, hospitals, garages, roadways, and so on, to be constructed. It is perfectly true that this contractor is not now being given an opportunity/ to tender for War Office contracts.

The reason is that his costs were very much higher than the costs of other contractors, and, so far, no satisfactory explanation has been offered.

Mr. Stokes: Although I agree that the costs of this contractor may be excessive, is it not a fact that no case has been proved against him? In view of the unsatisfactory answer, I beg to give notice that I shall raise the matter on the Adjournment.

GENERAL OFFICERS (FORWARD BATTLE AREAS).

Lieut.-Colonel Sir Thomas Moore: asked the Secretary of State for War whether there is any regulation which permits senior officers to travel in forward areas of battle without adequate protection; and, if not, will he take steps to rectify this dangerous state of affairs?

Mr. Law: The presence of senior officers in forward areas of battle is often essential if they are to maintain control of the situation. It is neither possible nor desirable to attempt to define by regulation what degree of protection would be adequate for such officers in these conditions. The question is one which must be left to the discretion of the individual commander, in the light of the circumstances prevailing at the time.

Mr. Garro Jones: In the case referred to by my hon. and gallant Friend, the capture of three general officers of high standing, was not the real trouble the fact that they thought the forward area was more than 200 miles distant from them; and does not that indicate a serious lack of intelligence, demanding the attention of the War Office?

Mr. Law: That is another question. My hon. and gallant Friend's Question was about whether some steps were necessary to control the movements of senior officers in forward areas. I indicated that this was not desirable.

HUTS AND BUNGALOWS (REQUISITIONING).

Sir L. Lyle: asked the Secretary of State for War how many claims have been settled by the War Department land agent for a refundment of a proportion of the rent paid in connection with the huts and bungalows definitely requisitioned by his Department, and in respect of which all licensees concerned were notified in October last to take the necessary action?

Mr. Law: This information is being obtained from Commands, and I will communicate with my hon. Friend as soon as it is received.

Sir L. Lyle: What responsibility does the War Office take in the case of these huts and bungalows?

Mr Law: It would be more convenient if that Question were on the Paper.

OFFICERS' OUTFIT ALLOWANCE.

Major-General Sir Alfred Knox: asked the Chancellor of the Exchequer whether he will now consider raising the outfit allowance of young officers on first appointment, as £30 since the introduction of the Purchase Tax is found to be insufficient?

The Financial Secretary to the Treasury (Captain Crookshank): The Purchase Tax falls upon all members of the community according to their liability to pay on the purchase of taxed goods, and my right hon. Friend regrets that he would not feel justified in relieving Army officers of such taxation by increasing the amount of the outfit allowance.

Sir A. Knox: Does not my right hon. and gallant Friend agree that £30 is quite insufficient to provide an officer with his outfit, and is he aware that there are complaints from every regiment about this?

Mr. Bellenger: Is the right hon. and gallant Gentleman aware that, quite apart from the Purchase Tax itself, £30 is at least one-third below the outfit allowance granted to officers during the last war, and will he take an opportunity of consulting serving Members of the House as to the actual cost of fitting themselves out?

(Captain Anstruther-Gray: Is my right hon. and gallant Friend aware that the line he is taking makes it very difficult for soldiers without private means to take commissions?

Captain Crookshank: I can only report to my right hon. Friend what hon. Members have said.

Mr. R. C. Morrison: Will he also report to his right hon. Friend that it does not seem altogether sensible to give Government money for the purchase of officers' uniforms and then to tax that money at the rate of one-third?

Oral Answers to Questions — PRISONERS OF WAR.

Sir A. Knox: asked the Secretary of State for War whether he has any information regarding the conditions in the two so-called reprisal camps in Posen Stalag XXA and Stalag XXID; and whether the German Government has now acknowledged that no German officers were ill-treated in Canada?

Mr. Law: Information has been received that the conditions in Stalag XXA and XXID are not satisfactory. No communication has yet been received from the German Government to the representations that have been made through the Protecting Power.

Sir A. Knox: Is the hon. Member aware that a letter from an officer at XXID states that they are living in a cellar which was constructed in 1856, with no plumbing, no sanitation, and no daylight allowed into it? Can anything be done by the Government to put this right?

Mr. Law: Everything possible is being done through the medium of the Protecting Power; but my hon. and gallant Friend must realise by this time that we are fighting an unscrupulous foe, and it is not within our power to bring any further pressure upon him directly than we are bringing now.

Sir W. Davison: Will my hon. Friend say that there is no ground for suggesting that the German prisoners in Canada are receiving anything but good treatment?

Mr. Law: So far as I am aware, there is no ground whatever for any such suggestion. They are in a camp which was previously occupied by Canadian officers, and to which, before that, people paid to go for their holidays.

Oral Answers to Questions — ARMED FORCES AND CIVILIANS (PENSIONS AND GRANTS)

Mr. Ellis Smith: asked the Minister of Pensions whether he will consider the need and advisability of setting up appeal tribunals to whom persons could appeal who are not satisfied with the. decisions of his Ministry?

The Minister of Pensions (Sir Walter Womersley): As I have explained to the


House on more than one occasion, a general system of appeals to independent pensions appeal tribunals would be impracticable under the conditions of this war. The independent pensions appeal tribunals in connection with the last war were not set up until after hostilities had ceased, and the question will again be considered after this war. Meantime, however, I have taken power in the Royal Warrant to refer cases of serious medical doubt or difficulty to an independent medical expert.

Mr. Silverman: If it is the practice to refer cases of doubt and difficulty to an independent medical expert, why is it impracticable to allow appeals to be heard by that expert?

Sir W. Womersley: It is the practice to place the evidence of both parties before that expert. I believe my hon. Friend was present during the Debate on this matter yesterday. I shall refer him to the Official Report for full details of the position.

Mr. R. Gibson: Is the expert chosen by the Minister alone, or in consultation with the applicant?

Sir W. Womersley: The expert is not chosen by the Minister. He is chosen by the President of the Royal College of Physicians or, for surgical matters, by the President of the Royal College of Surgeons. I have nothing to do with the appointments.

Mr. Banfield: asked the Minister of Pensions whether he is aware of the plight of war widows of the 1914-18 war due to the fact that their pensions have not been increased to meet the increase in the cost of living; and will he give the matter sympathetic consideration?

Sir W. Womersley: The conditions under which these pensions may be raised are laid down in the Royal Warrant of 6th December, 1919.The hon. Member may be assured that steps will be taken to increase the rates when the cost-of-living figure justifies it.

Mr. E. Smith: asked the Prime Minister whether he will move for the appointment of a Select Committee to investigate the regulations and interpretations and administration of the Ministry of Pensions and the Royal Warrant, with power to send for persons, papers and

records and with an instruction to report as expeditiously as possible?

The Lord Privy Seal (Mr. Attlee): I am not aware of any developments since last September of sufficient importance to justify a departure from the view which I expressed on the 18th of that month to the effect that there were no grounds for appointing a Select Committee for this purpose. The Minister of Pensions has, however, informed the House that he intends to call together his statutory Advisory Committee at an early date for the consideration of certain minor matters on which he wishes to consult them. As has already been announced in the Press, the administration of the Department is already being examined in detail by a Committee under the chairmanship of the hon. Member for South-West St. Pancras (Sir G. Mitcheson).

Mr. Smith: The present position is so unsatisfactory that I consider it my duty to give notice that at the earliest possible opportunity, and to the mutual convenience of all concerned, I will raise the matter on the Adjournment.

Oral Answers to Questions — CONCENTRATION OF PRODUCTION.

Mr.Lyons: asked the President of the Board of Trade whether he will give an assurance that in any proposals for the telescoping of industry and the consequent closing of business concerns that will be entailed, he will safeguard the position of the small proprietor in that the multiple stores and co-operative society branches are not allowed privilege against him to his complete commercial annihilation?

The Parliamentary Secretary to the Board of Trade (Captain Waterhouse): Yes, Sir I can assure my hon. and learned Friend that, in approving proposals made by manufacturers for concentration of production, no advantage is given to the suppliers of large concerns that is not also available to the suppliers of the small retailers.

Mr. Lyons: Would my hon. and gallant Friend say whether, in view of the great apprehension on this matter, he would cause some public announcement to be made of the safeguards and their nature, so as to prevent hundreds of thousands of people being put into a pitiful position?

Captain Waterhouse: My right hon. Friend the President of the Board of Trade has made it very clear that his aim and object are to safeguard the position of the smaller men, and he will do nothing to their disadvantage at all. I hope that that will meet the point of my hon. and learned Friend.

My. Lyons: While I am grateful for that, would my hon. and gallant Friend take steps to see that some statement is made of what these safeguards are to be, because the word "safeguard" used by a Government Department is not trusted in the minds of the people? They would like to know concretely the proposals that are to bring about what my hon. and gallant Friend suggests.

Captain Waterhouse: My hon. and learned Friend will realise that these schemes are arranged between the firms concerned, and that it is therefore impossible for the Board of Trade to lay down any specific safeguards. What they have undertaken to do is to bear the interest of the small men specially in mind when schemes are submitted for approval.

Mr. Lyons: In the meantime will not the small man himself be put out of business because of the complete lack of policy of the Department in this matter?

Sir Joseph Lamb: Will my hon. and gallant Friend ascertain what stores these large firms have acquired and are now holding for their own purposes?

Mr. Rhys Davies: Will the hon. and gallant Gentleman undertake that when any schemes come before him to close the premises of small business men he will see that a proportionate number of branches of the big firms are closed in the same way?

Captain Waterhouse: There is no scheme at all at present for the retail shopkeepers. The retail shopkeepers are not at present being asked to concentrate. If they find that it is necessary owing to the reduction of business to concentrate, they will do it of their own free will, and in so doing they will not in any way be forced by the Government. The Government are generally sympathetic to their difficulties, and will do all they can to see that they get a square deal. Perhaps my hon. Friend the Member for Stone (Sir J. Lamb) will put his question down.

Mr. Lyons: Arising out of the very unsatisfactory nature of the position that has been disclosed, I shall take an early opportunity of raising the matter on the Adjournment.

Oral Answers to Questions — STOCK EXCHANGE LONDON.

Mr. Banfield: asked the President of the Board of Trade whether the Stock Exchange is registered under the provisions of the Prevention of Fraud (Investments) Act, 1939; whether his attention has been called to a regulation recently made by the committee of that body to restrict dealings in public securities with members of stock exchanges registered under the provisions of that Act; and what action he proposes to take in the matter?

Captain Waterhouse: The Stock Exchange, London, is a recognised stock exchange, not by order of the Board of Trade, but by a specific provision in the Prevention of Fraud (Investments) Act, 1939 I am aware that the Stock Exchange Committee recently made certain alterations in the rules dealing with agency and rebating commission. Such arrangements are not subject to Government control.

Oral Answers to Questions — CIVIL DEFENCE.

BILLETING.

Sir Richard Wells: asked the Minister of Health what Department is responsible for reporting when a reception area is full; whether he is aware that the Services press for accommodation for the Forces, the local authorities for evacuation and education schemes and the Office of Works for the purposes of the ever-increasing Government Departments; and will he take steps to end the present difficulty which prevents the inhabitants from making their maximum contribution to war effort by the worry and hardship entailed by the competitive and unco-ordinated pressure of rival claimants for accommodation upon them?

The Parliamentary Secretary to the Ministry of Health (Miss Horsbrugh): My Department is responsible for co-ordinating requirements for civil billeting, and these are adjusted with military requirements both regionally and at headquarters. The demands for accommodation in reception areas are bound to increase with the exigencies of war, and this will neces-


sarily affect the present standards of comfort and convenience; but the situation in these areas is kept continuously under review, and appropriate measures are taken to prevent overcrowding and to spread the burden as evenly as practicable.

Sir W. Davison: Is the hon. Lady aware that the present unco-ordinated requisitioning of flats and dwelling-houses has become something of a scandal and that in my own constituency large new flats occupied by doctors and others who are doing national work are being requisitioned and the people turned out at a few days' notice, in order to take in refugees from Gibraltar and elsewhere?

Miss Horsbrugh: I think my hon. Friend will agree that this has not been done without co-ordination. If, as I think we all agree, British subjects from Gibraltar or anywhere else are to come to this country while the war goes on, suitable accommodation must be found for them. In the arrangement for taking over flats and other buildings nobody, as far as I know, has been turned out at a few days' notice. If my hon. Friend has any cases like those he has mentioned and will let me have details, I will look into them at once.

Sir W. Davison: Why should they be sent to London? Why should not they be sent into the country or somewhere else, especially as in my constituency there are large unoccupied houses to which they could be sent?

Miss Horsbrugh: Perhaps my hon. Friend will be good enough to talk the matter over with me as there are particular difficulties which I could perhaps explain to him. If my hon. Friend would go to certain parts of the country he would find a great many people there who would suggest that these refugees should be kept in London.

Sir R. Wells: Does the Department of the hon. Lady consult other Departments of State in these matters?

RENTS (EVACUEES).

Mr. Sorensen: asked the Minister of Health whether he is aware of the disproportionate rents still being charged by

householders to sub-tenants who have evacuated from bombed areas; that teachers and other evacuees in certain towns have had to pay 25s. for a single unfurnished room; and what further steps he proposes to take to prevent the charging of extortionate rents?

Miss Horsbrugh: As regards furnished lettings, I am sending my hon. Friend a copy of a reply which my right hon. Friend gave on 3rd April to the hon. Member for Llanelly (Mr. J. Griffiths) together with a copy of the Circular, dated nth April, mentioned in that reply. As regards unfurnished sub-lettings, the Rent Restriction Acts provide a simple remedy, and I have no evidence that there is any general tendency to overcharge sub-tenants. Such sub-lettings are subject to a definite standard rent, a statement of which the tenant is obliged under penalty to give to the sub-tenant on demand, and, in cases of doubt, the standard rent may, on the application of the sub-tenant, be determined by the Courts. I should be glad to have details of any cases which have come to the notice of my hon. Friend so that I may at once look into them.

Mr. Sorensen: Would it be possible to have a notice placed in post offices and outside town halls so as to acquaint the many inquirers with the facts to which it is desired to draw their attention?

Miss Horsbrugh: I think some publicity would be advisable, but there are so many notices outside post offices and town halls, where some seem to be pasted over the others.

Sir Francis Fremantle: Would the reply also protect the sub-sub-tenants from the extortionate charges of the subtenants?

Miss Horsbrugh: If my hon. Friend will bring to my notice any difficulties of sub-sub-tenants, I shall be glad to look into them.

Mr. Silverman: Is the hon. Lady aware that the provisions of the Rent Restriction Acts with regard to unfurnished rooms are largely rendered abortive by the partial furnishing of such rooms, and would it not be possible, by legislation if necessary, to introduce regulations applying to furnished as well as to the unfurnished types of rooms?

Miss Horsbrugh: I think that my hon. Friend will agree that there is a difficulty in laying down a scheme for partially furnished rooms. It is difficult to assess the value of furniture in any particular furnished place, and that makes the position more difficult, but if my hon. Friend will bring to my notice any particular cases, I will look into them all.

MOTHERS AND CHILDREN, LONDON (EVACUATION).

Sir T. Moore: asked the Minister of Health, whether he will consider the compulsory evacuation from London of all mothers and children not required for the prosecution of the war; and whether similar action will be considered for invalids?

Miss Horsbrugh: I would refer my hon. and gallant Friend to the statement made by my right hon. Friend's predecessor on 19th December last. My right hon. Friend does not think that the reasons then given for the policy outlined in the statement have lost their cogency, and he is satisfied that it would not be wise to alter that policy now.

Sir T. Moore: Does my hon. Friend think that it is reasonable and logical that reception should be made compulsory and evacuation allowed to be voluntary; and does she think it wise that children should be distressed, mentally and physically, by the horrors of housing in London?

Miss Horsbrugh: As to evacuation being voluntary and reception compulsory, I think that my hon. and gallant Friend will agree, on consideration, that this is the right course. If people wish to leave these areas for their own good, we must find them accommodation in reception areas. As to the mental and physical distress, we have taken particular powers to deal with that.

Mr G. Strauss: Can the hon. Lady say how many children have been evacuated from London to the country generally under the compulsory scheme which was announced on 19th December?

Miss Horsbrugh: I should have to have notice of that Question. The children are being watched very carefully, and there is no doubt that, in the greater number of cases, their state of health in body

and mind has proved good. If the hon. Gentleman will put down a Question, I will give him the number of children who have been evacuated under the compulsory arrangements.

SHELTERS.

Mr. Sorensen: asked the Secretary of State for the Home Department to what extent the evidence in his possession goes to show that frequently in some districts shelters have been used for immoral purposes during "all-clear" periods; and whether he considers that the police and local authorities have needed or still need the assistance of private organisations in this matter?

The Under-Secretary of State for the Home Department (Mr. Peake): No information has reached me suggesting that shelters are frequently used for immoral purposes during "all clear" periods, but if my hon. Friend would kindly let me have any evidence he may possess, I will certainly look into the matter.

Mr. Sorensen: Is the hon. Gentleman aware that the Public Morality Council have made certain sweeping statements which are very much resented by those who use these shelters, and therefore, will he see that this information is conveyed to the Public Morality Council so that they may be more careful in future?

Mr. Peake: The hon. Gentleman is quite right in saying that this matter has been very greatly exaggerated.

Mr. Sorensen: Does the hon. Gentleman agree that this will give great satisfaction to those who resent this imputation?

Mr. Peake: indicated assent.

Mr. Culverwell: asked the Home Secretary whether the cost of demolishing and reconstructing defective air-raid shelters will be borne by the Government?

The Joint Parliamentary Secretary to the Ministry of Home Security (Miss Wilkinson): So far as regards shelters provided by local authorities, this work will form part of the work of shelter construction, the whole cost of which, as my hon. Friend knows, is now reimbursed by the Government subject to the usual arrangements for securing the exercise of a reasonable economy. In some cases, how-


ever, the defects have been found to be due to shortcomings on the part of contractors and it would clearly not be right in these cases for the cost of reconstruction to fall on public funds.

Mr. Culverwell: Is the hon. Lady aware that I am referring to those shelters which the Government urged local authorities to put up on faulty specifications, and which local authorities realised would become useless and unsafe? Is she aware that these shelters have to be pulled down, and that this is a waste of public money; that it has nothing to do with contractors, but is due to the faulty specifications which the Government gave; and in those circumstances, surely it is for the Government to bear the cost?

Miss Wilkinson: I think the hon. Member is greatly exaggerating the effects of a certain circular which allowed ungauged lime mortar to be used. We have found, as a matter of fact, that where the workmanship was good, the shelters have stood up quite well. Unfortunately, certain people have taken advantage of what they considered to be, and what was, a certain relaxation of our stringent restrictions, and have gone far in excess of anything contemplated by the circular. The Government are looking at this matter very carefully. They have given instructions for the shelters to be closed, and are now considering what should be done in the case of those contractors.

DETENTION.

Mr. Stokes: asked the Home Secretary whether he is aware that Mr. Arnold Leese has been on hunger strike in detention since 4th March as a protest against wrongful detention; and whether he will say for what reasons his detention is being continued?

Mr. Peake: Yes, Sir. As regards the second part of the Question, Mr. Leese is being detained in pursuance of an order made under Defence Regulation 18B because my right hon. Friend is satisfied that it is necessary to exercise control over him.

Mr. Stokes: Will the hon. Gentleman give an assurance that Mr.Leese is not being detained on account of his well-known anti-Freemason and anti-Semitic views?

Mr. Peake: I do not think it would be proper for me to state the reasons for this man's detention, other than that they come under Defence Regulation I8B, but I may add that this man has not exercised his right of appeal to the Advisory Committee.

Oral Answers to Questions — EDUCATIONAL FACILITIES (CO-ORDINATION).

Mr. Hannah: asked the Prime Minister whether he will consider setting up a Royal Commission on Education, with a view to co-ordinating all our educational facilities, especially the public schools, in order to give every child the best opportunities which he or she is capable of using and to secure for the community the services of the best brains that every family in the country can produce?

Mr. Attlee: No, Sir. My right hon. Friend is satisfied that in present circumstances it would not be possible to secure the services of those representative persons who would be required to form such a Commission as is suggested. Nor does he consider that a Royal Commission would afford the best means of considering this matter. Education constitutes one aspect of the general problem of national reconstruction which, as my hon. Friend is aware, is under the consideration of the Government.

Mr. Hannah: Is there not a real danger of some of the admirable small schools, such as Birkenhead, coming to an end altogether in the present strenuous times?

Sir Annesley Somerville: Is the right hon. Gentleman not aware that public schools are only too anxious to provide their educational facilities for boys from any section of the community who are qualified to take advantage of them?

Mr. Attlee: No doubt my hon. Friend the Member for Bilston (Mr. Hannah) was quite correct, but to set up a Royal Commission would not deal with either of those two points.

Oral Answers to Questions — WORKMEN'S COMPENSATION.

Mr. James Griffiths: asked the Minister without Portfolio what steps he is taking to consider the operation of the Workmen's Compensation Acts; whether


it is proposed to call for a resumption of the sittings of the Royal Commission; and whether it is intended to deal with some aspects of the matter in the near future?

The Minister without Portfolio (Mr. Arthur Greenwood): This question is under consideration, but I am not in a position to make an announcement at present.

Oral Answers to Questions — HOUSEHOLD WASTE (COLLECTION).

Mr. Evelyn Walkden: asked the Minister of Supply when the reports of the special committee set up to deal with the question of collection and disposal of. kitchen waste food will be available?

The Minister of Supply (Sir Andrew Duncan): The report of the special committee which was appointed by the Ministers concerned has just been received and is now under consideration.

Oral Answers to Questions — LOCAL AUTHORITIES' STOCK (CONVERSION).

Sir. Tinker: asked the Chancellor of the Exchequer what steps he is taking to assist local authorities to convert municipal stock bearing interest of 4 per cent, and over; and what conditions he is asking them to adopt in offering interest on converted loans or other loans?

Captain Crookshank: Arrangements are being made with the local authorities concerned under which they will give notice that they are exercising their option to repay these stocks and at the same time make an offer of conversion in respect of the whole or part of the stock. The local authorities are being asked to adopt uniform terms for the conversion offers which will be at par with 3½ per cent, stocks with a fife of 19 to 29 years. The Public Works Loans Act contains provisions under which the Treasury can make advances to enable local authorities to repay any stock not converted.

Mr. Tinker: Why is the figure of 3½ per cent, mentioned when the Government are borrowing money now at a rate not exceeding 2 per cent.? Why cannot municipal stock be put on the Government basis?

Captain Crookshank: The matter has been carefully considered, and this is the decision reached by my right hon. Friend.

Mr. De la Bére: Why do the agricultural community have to pay 5 per cent.?

Oral Answers to Questions — INCOME TAX (WORKERS' TRAVELLING EXPENSES).

Mr. Mainwaring: asked the Chancellor of the Exchequer whether, in the proposal to introduce compulsory savings by imposing Income Tax upon earnings at a lower level, he gave consideration to the unequal manner large numbers of people will be affected thereby due to the incidence of unavoidable travelling expenses, etc.; and is he prepared to reconsider the question in the light of these factors?

Captain Crookshank: My right hon. Friend is afraid that he cannot see his way to propose an extension of the basis on which deductions for expenses are allowed in assessing wages and other emoluments to Income Tax.

Mr. Mainwaring: Are we to assume that the basis taken by the Department in assessing the possible saving powers of an individual is not the income entering the home, but the income paid at the point of production? Is the right hon. and gallant Gentleman aware that there are hundreds of thousands of workmen who are necessarily contributing at least £25 a year in travelling expenses?

Mr. Collindridge: Does the right hon. and gallant Gentleman realise also that the Government's policy of curtailing the housing programme has resulted in an increase in travelling expenses?

Mr. Woods: Does the right hon. and gallant Gentleman consider it right that the whole population of suburban London, who have to work in the City and are compelled to live outside, should now be placed at a disadvantage compared with those who live in the vicinity of the place where they work? Will he reconsider the matter?

Captain Crookshank: I am sure that it is a matter of great importance to many people, but my right hon. Friend does not think that, in our present state of affairs, he should propose an extension of the basis upon which deductions are made.

Oral Answers to Questions — IRAQ (GERMAN INFILTRATION).

Sir Henry Morris-Jones: asked the Secretary of State for Foreign Affairs whether he is aware of the increasing permeation of German personnel to Iraq and the consequent danger to our oil supplies as well as other strategic dangers; and whether steps are being taken to deal with the situation?

Mr. Eden: I am well aware of the potential menace to our interests and to the independence of Iraq of any German infiltration into that country.

Sir H. Morris-Jones: Assuming that in this instance we may have anticipated a German occupation, may I ask my right hon. Friend whether, in regard to German agents now in Iraq, he will see that no kid-glove Foreign Office hypersensitive-ness is shown to them, and will he see that they are all cleared out right away, bag and baggage?

Mr. Eden: I do not know whether my hon. Friend was applying those gentle epithets to me, but if so, I can assure him that they will have no place in any action we may take where we have the authority and the power to take it.

Mr. Granville: Will an opportunity be given on a proper and suitable occasion for my right hon. Friend to give us an account of his visit to this part of the world?

Oral Answers to Questions — PRIVATE PROPERTY (GOVERNMENT REQUISITIONING).

Sir R. Wells: asked the Parliamentary Secretary to the Ministry of Works and Buildings whether he is aware that two elderly ladies, lifelong residents in the area, whose furniture has been moved as their present house has been occupied by the military and they have to leave it, have had their new home requisitioned by a Department, and therefore will be compelled to find what accommodation they can for themselves and their furniture, although from inquiries it appears there is no accommodation available; and, in view of the hardship, will he see that these two ladies do not lose their home?

Mr. Hicks: Yes, Sir, I am aware of the facts. The house, which has not yet been occupied by the ladies, is required

urgently for Government purposes, and, much as I regret the inconvenience caused, I cannot agree to withdraw the requisition.

Sir R. Wells: asked the Parliamentary Secretary to the Ministry of Works and Buildings whether he has any option to cancel decisions for the requisition of property previously made by his Department under a misapprehension, when the true facts and consequential. hardship involved in the decision have been pointed out?

Mr. Hicks: Yes, Sir. It is open to the Department to release requisitioned accommodation should it be found desirable to do so. The requisitioning of property for urgent Government purposes frequently causes hardship, but every effort is made to minimise the inconvenience, subject, of course, to the priority of Government demands.

Sir J. Nall: Will my hon. Friend have it made perfectly clear to his officers that where empty premises are available persons occupying furnished premises ought not to be disturbed?

Mr. Hicks: That matter is considered, but, of course, it is always related to the suitability of premises.

Sir Percy Harris: Does my hon. Friend realise that his officials are inclined to be autocratic, and will he see that more sympathy is shown in meeting the convenience of the public, and that when empty buildings are available, which perhaps may not be so convenient, such premises are requisitioned first?

Mr. Hicks: I am unable to accept the statement that the officials are too autocratic. Every consideration is shown, but it must be remembered that every interference with individual liberty is always autocratic, when the requirements of the State demand it.

Sir J. Nall: Does my hon. Friend realise that the arguments he has used are themselves autocratic?

Oral Answers to Questions — ROYAL NAVY (SEPARATED WIVES, ALLOWANCE).

Miss Eleanor Rathbone: asked the First Lord of the Admiralty whether he will make a full statement showing the position of a separated wife regarding her


claim to a separation allowance for herself and the children of a sailor in her charge, distinguishing between cases where the wife has received an allowance from the sailor before his enlistment under a maintenance order or a judicial separation or by informal agreement, or is entitled to such an allowance under maintenance order or judicial separation and has made reasonable efforts to secure its payment without success, and, further, showing how the claim will be affected if an allowance is also claimed by a woman living with the sailor as his concubine?

The Financial Secretary to the Admiralty (Sir Victor Warrender): I would refer my hon. Friend to the answer given yesterday by my right hon. Friend the Secretary of State for War to a similar Question. Identical conditions apply to naval ratings. In their case the authority for compulsory stoppages is Section 98a of the Naval Discipline Act.

Oral Answers to Questions — YUGOSLAVIA (GOVERNMENT).

Mr. Erskine Hill (by Private Notice): asked the Secretary of State for Foreign Affairs whether he has any statement to make on the subject of the relations of His Majesty's Government with the Yugoslav Government?

Mr. Eden: Yes, Sir. The King of Yugoslavia and the Yugoslav Government, having been forced by enemy action to leave Yugoslavia, have now established themselves in the Middle East. The Yugoslav Government thus continues as the properly constituted Government of the whole of Yugoslavia which country is at war with Germany and Italy at the side of the Allies. On 21st April, His Majesty's Government received a formal assurance from the Yugoslav President of the Council of the intention of the Yugoslav Government to stand faithfully by His Majesty's Government as Allies, and of their resolve to continue the struggle until final victory is won. I need scarcely inform the House that His Majesty's Government take note of this assurance with the utmost satisfaction and declare, for their part, that it is their firm intention fully to restore the independence of Yugoslavia. Meanwhile the Yugoslav Government may count on the fullest possible measure of help from His

Majesty's Government in the prosecution of the struggle against the common enemy.

Mr. Riley: Has the Foreign Secretary any information as to the whereabouts and safety of Dr. Matchek?

Mr. Eden: No, Sir, I regret that I have none at present.

Preamble

[MR.SPEAKER in the Chair.]

Orders of the Day — WAYS AND MEANS.

REPORT [7th APRIL]

Resolutions reported:

CUSTOMS

HOPS, &C AND BEER.

1."That the period for which the following duties of customs are chargeable (which expires on the fifteenth day of August, nineteen hundred and forty-one) shall be extended by four years, namely: —
(a)the duties now chargeable by virtue of subsection (i) of section one of the Finance Act, 1937, on hops, hop oil and extracts, essences or other similar preparations made from hops; and
(b)the additional duty now chargeable in respect of beer by virtue dl that subsection.'

INCOME TAX

CHARGE OF TAX.

2."That—
(a) income tax for the year 1941-42 shall be charged at the standard rate of ten shillings in the pound, and, in the case of an individual whose total income exceeds one thousand five hundred pounds, at such higher rates in respect of the excess over one thousand five hundred pounds as Parliament may hereafter determine;
(b) all such enactments as had effect with respect to the income tax charged for the year 1940-41, other than such enactments as by their terms relate only to tax for that year, shall have effect with respect to the income tax charged for the year 1941–42. And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913"

HIGHER RATES OF INCOME TAX FOR 1940–41.

3. "That the income tax for the year1940–41 shall be charged at rates exceeding the standard rate in the case of individuals whose total incomes exceed two thousand pounds, and those rates shall be rates in the pound which respectively exceed the standard rate for that year by the amounts specified in the second column of the Table in subsection (1) of section seven of the Finance(No. 2) Act, 1940.

And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

RELIEFS AND EXEMPTION FROM TAX.

4. "That the following enactments relating to reliefs and exemption from tax shall be amended as Parliament may provide by any

Act of the present Session relating to income tax, namely:—
(a) subsection (2) of section forty of the Finance Act, 1927, as amended by subsequent enactments (which relates to the reduction of the tax remaining chargeable after the allowance or other reliefs);
(b) subsection (1) of section fifteen of the Finance Act, 1925, as so amended (which relates to relief in respect of earned income) and subsection (2) of that section, as so amended (which relates to persons over sixty-five years of age);
(c) section eighteen of the Finance Act,1920, as so amended (which relates to the personal allowance);
(d) section nineteen of the Finance Act, as so amended, (which relates to the exemption of incomes not exceeding one hundred and twenty pounds and a reduction of tax in the case of incomes less than one hundred and forty pounds)."

FARMING.

5"That farming (including the occupation of lands as nurseries and market gardens)shall be taxed as a trade under Schedule D, in accordance with such provisions as Parliament may determine by any Act of the present Session relating to income tax."

CONCENTRATION OF INDUSTRY.

6. "That the trades of the persons who are parties to arrangements for concentrating industry or business in the hands of fewer persons shall be treated for income tax purposes as continuing and sums payable to them under the arrangements shall be treated for those purposes as trading receipts."

PAYMENTS IN RESPECT OF WAR INJURIES TO EMPLOYEES.

7. "That in computing profits or gains or total income for any income tax purpose, no deduction shall be made for payments, to or in respect of employees who sustain war injuries or for premiums or contributions under policies, agreements, schemes or arrangements providing for such payments; and no such payments, premiums or contributions shall be included in computing expenses of management or supervision or the cost of maintenance, repairs or insurance."

ASSESSMENTS UNDER SCHEDULE A.

8. "That—
(a) assessments made under Rule 8 of No. VII of Schedule A shall be valid although not made on the person who should have been assessed;
(b) further provision shall be made as to the persons from whom and the manner in which tax under Schedule A shall be recoverable;
(c) this Resolution shall apply to past and future assessments, for whatever year of assessment."

RENTS UNDER LONG LEASES, & IN SCOTLAND.

9 "That any payment made in respect of land in Scotland for a Period ending on the


fifteenth day of May in any year, being a payment to which section seventeen of the Finance Act, 1940 (which applies to rents under long leases and other annual payments in respect of land) applies, shall be treated for income tax purposes as if it had become, due at the commencement of that period

And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

MISCELLANEOUS

EXCESS PROFITS TAX.

10. "That the extent and incidence of excess profits tax (for past and future chargeable accounting periods) shall be varied so as to give effect: —
(a)to amendments as to standard profits and the computation of capital, the computation of profits and losses, successions and amalgamations, the avoidance of tax, interconnected companies, chargeable accounting periods falling partly before and partly after the end of March, nineteen hundred and forty, the relief to be given for deficiencies of profits and the relief to be given for excess profits tax in parts of His Majesty's dominions outside the United Kingdom;
(b)to provisions relating to arrangements for concentrating industry or business in the hands of fewer persons; and
(c)to provisions enabling persons liable to the tax to recover tax from persons who have received payments for services which have been disallowed under section thirty-two of the Finance Act, 1940."

NATIONAL DEFENCE CONTRIBUTION.

11. "That the extent and incidence of the National Defence Contribution (for past and future chargeable accounting periods) shall be varied so as to give effect to amendments as to the computation of profits and losses, and to provisions relating to arrangements for concentrating industry or business in the hands of fewer persons."

POWER TO BORROW FOR CERTAIN FINANCIAL PURPOSES.

12. "That the whole or any part of the sums required for the current financial year for the purposes mentioned in paragraph (a) or paragraph (b) of sub-section (4) of section twenty-three of the Finance Act, 1928, as amended by any subsequent enactment, maybe provided out of money borrowed for the purpose under the National Loans Act, 1939,instead of out of the permanent annual charge for the National Debt."

First Resolution agreed to

INCOME TAX.

Second Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. Woodburn (Stirling and Clackmannan, Eastern): The Resolution to increase the Income Tax of this country has met with satisfaction by people generally as being an indication of the

Government's resolve to carry the war through by the complete organisation of the country. It is true that in many instances. Income Tax is reaching the point where it raises considerable difficulties. I think it is right that the Government and the House should realise, with the incidence of Income Tax as it is to-day, that it is rapidly reaching the stage where, from the point of view of the normal incentive provided for people to carry on their duties, it will eventually be a handicap in this and other directions in achieving progress in the war effort. I came across an instance the other day of a civil servant being offered promotion. He accepted it, but the curious thing was that in accepting that promotion the man suffered a reduction in his income. That was partly due to the incidence of Income Tax and to other circumstances arising out of the war.
There are many circumstances arising to-day where the effects of the incidence of Income Tax are a deterrent on people accepting more responsibility, and therefore the normal inducement of additional income is being removed as a method of securing additional effort. That throws on the Government the responsibility of providing some other incentive, and I think we ought to register our appreciation of the fact that throughout the country to-day the overwhelming majority of the people are willingly rendering service, on the ground of patriotism and from the desire to see the country victorious, in spite of the fact that they themselves may be personally handicapped in the action that they take. It is therefore desirable that this House should also register, in the case of firms and individuals who are putting personal motives first and handicapping the progress of the war, their contempt for such action. Some firms are showing an entirely selfish outlook and are prepared, even at the risk of the defeat of the country, to handicap the war effort, but we are glad to say, in contrast to that, that the overwhelming mass' of the people are making voluntary sacrifices.
Taxation by money is not the only taxation that is being levied. When the Chancellor of the Exchequer takes 10s. in the £ in taxation he takes away half the right to consume goods or employ labour, and the State takes the means of spending that money, instead of the person taxed. The


State is doing that in other ways as well, because, as it calls people up for service in the Army or for the Civil Defence Forces, as it enrols people for service in the nation's effort, it automatically removes from the sphere of employment large numbers of people and therefore even though a person might have thousands of pounds of income, they become relatively useless to him if there are no people to employ, and no goods to purchase. Therefore taxation is not only imposed by means of the Chancellor's efforts, but a very large amount of real taxation is being carried through by the reorganisation of the man-power of the country in a planned and constructive fashion. If we take that to its logical conclusion and imagine that the Government are organising the activities of the whole man-power of the nation—it is immaterial whether you register it by money means or not—you are effectively depriving everyone of spending money except in the case where the State gives permission to do so.
Take the case where ever so many people are competing for building-trade labour to repair houses and shops which have been damaged. You get a kind of option market for building-trade labour. I am informed that public houses are the first in the market by offering the highest prices to have their establishments repaired, and in every "blitzed" area the public house is the first place to be repaired. That is obviously a matter of competition for building-trade labour. If the Government take steps to decide what repairs are to be done first, and plan those repairs in the order of their necessity and of public service, they may decide that public houses come last, in which case it would not matter how much money the publican was willing to spend; his money would be useless because the Government would be achieving the purpose of controlling the labour by other means than taxing the publican and removing his ability to purchase the labour. Therefore, in contemplation of the Budget, and of this particular Resolution, we must realise that the conception of simply taxing people and removing their power to spend is only one part, and is becoming a less fundamental part, of the Government's power to decide what is to be done by the labour of the country; and I am sure I express the feelings of the country as a

whole that all these measures of taxation, of organising the man-power of the country or of taking the cash from the people in order to divert that man-power to a public purpose, are giving evidence that the Government are going to spare no effort to organise the country to achieve its maximum effort for victory.

Major Sir George Davies: In attending the Budget Debates this year, what has struck me is that the level of interest of all the speeches in connection with it has been a great deal higher than on many occasions in the past. The reason is that we have tended to get away from those small details, such as so much on tea, etc., to really big issues. The last speaker has confined himself very largely to some of those broader issues that are raised by the Budget proposals, and, while it is true that the nation as a whole, and certainly we who listened to the Budget being unfolded, have cheerfully and gladly welcomed its savage taxing provisions, it would not perhaps be out of place to recall some of those implications which are inevitable in connection with this rate of taxation.
Nothing can be more certain than that the standard of life of practically everyone in the country will be completely upset. You have only to think of the extreme of the 19s. 6d. in the £ person who lives in a realm of fairyland compared with the rest of us. Everyone of us, even if he has not been living extravagantly, has to recast entirely his standard of life. It is inevitable that in any Budget provisions this ratio must bear more heavily on some than on others. The very wealthy have very heavy commitments and responsibilities of various sorts which are not comprised in the ordinary spending of money on themselves, and they will find it very difficult to reconstruct, even if they are left with a substantial income. I cannot hide from my mind the effect that this is going to have on those great charitable institutions which have so largely been supported by those with considerable wealth. The voluntary hospitals, Dr. Barnado's work, the Waifs and Strays, the Argnes Weston Homes, and hundreds of thousands of charitable organisations have been kept going largely by contributions from the better-to-do. They will suffer very severely and will have to recast their standard of life.
Then we come down to those of whom I very often think, those with incomes ranging between £500 and £1,000. The man with an earned income of £500, who spends £490 and is £10 to the good, has no cushion to fall back upon. He has commitments of rent, insurance and education, and I think he will find he will have great difficulty. With regard to those who have a cushion to fall back on, these provisions will be tantamount to an elastically applied capital levy, so that two of the great cries that we have often heard from hon. Members opposite, one about the conscription of wealth and the other about the capital levy, are taking place before our eyes. I mention these considerations, because it seems well to bear in mind the position in which we are finding ourselves.
In this connection I wish to make an appeal or suggestion to the Chancellor of the Exchequer which I have made in the past, and which is, indeed, I may say an annual event. At present, our relations with the United States of America are growing, as we hope, ever closer. The United States are taking an ever-greater part in this world convulsion and we now read that, following in the footsteps of our own Chancellor of the Exchequer, they are about to increase their taxation enormously. Certain people in this country—it is true they are fewer to-day because of the Treasury's policy of impounding, as it were, the investments of British citizens in the United States, but there is still a considerable number of them—have sources of income on both sides of the Atlantic. These people find that not only are they paying American tax on the source of their American income, but that the same source of income is being taxed at the highest rates over here. Thus they find themselves contributing, not only to the upkeep of an ever-increasing British Navy but also to the upkeep of two United States navies, one for the Atlantic and the other for the Pacific—all coming out of the same income.
I know that there have been great difficulties because it is a question of cooperation with a foreign country, unlike the arrangements which we have been able to achieve with our own Dominions on this matter of double taxation. But at a time like this, when we have had the passing of the Lease and Lend

Act in the United States, when proposals for the actual application of the money has passed Congress and when the speeches that we read and the general atmosphere show a closer outlook on the part that our two countries are playing in this war, I suggest that this is a consideration which might, at least, be put forward. I suggest that a person with interests in the United States should properly have those interests taxed for the defence purposes of the United States but that when it comes to a question of applying the taxation of this country, that the double taxation should be, if not entirely avoided, at least to some extent reduced, because it falls with tremendous additional force on top of the already heavy blows which we are bearing here.
We, one and all, know that whether this is a 10 per cent, or a 100 per cent, capital levy is immaterial. We have to win this war and everything that any of us has got must be put into the winning of it. At the same time, it is not out of place to bring forward some of these considerations, and 1 hope that the Chancellor may be encouraged by what I have said to take up this question again with the proper authorities and to see whether what seems to be a very heavy unfairness cannot somehow be alleviated. We can with courage say that we are prepared to bear this heavy taxation, but to do so twice over, for two Allies or near-Allies, is, I submit, putting it a little strongly. I hope the Chancellor of the Exchequer, therefore, will see his way at any rate to ventilate this question with our opposite numbers on the other side of the Atlantic.

Mr. Rhys Davies: I would ask the Chancellor of the Exchequer to look into a small problem which has been brought to my notice. I do not propose to dwell on the larger issues of taxation mentioned by the hon. and gallant Member for Yeovil (Sir G. Davies) but I trust that nobody will refrain from making grants to hospitals because of this increased taxation. The point, however, which I desire to raise has come to my notice in this fashion. Deductions are now made by employers from wages, and it has been said several times in favour of this method that what we do not get we do not seem to miss. In the case of a coal miner working at the coal face his


wages are paid from the office of the colliery and the tax is deducted in the ordinary way. I do not know whether the practice applies all over the country but in certain districts it is customary for the coal miner to employ a young man as his assistant. This assistant is known in colliery language in some areas as his "butty." The miner pays this young man's wages himself and a case has been brought to my notice showing that while deductions in respect of Income Tax are made from the wages of certain colliery workers, young men of the type I have described are not taxed at the source. In one case a young man recently received from the Income Tax authorities an account for £8 15s. He was, of course, staggered to find that he had to pay Income Tax to that amount in one lump sum; if deductions had been made from his wages he would probably not have felt it at all. I understand from inquiry that this system applies not only to colliery workers but in some other industries as well where work is on a contract basis; and I would ask the right hon. Gentleman whether some method could not be devised to make regular deductions from., wages to prevent these young people receiving accounts for large amounts of Income Tax dues.

Mr. Hammersley: This Resolution imposes a level of Income Tax which is higher than any ever contemplated in the history of this country, either in peace or war, and I am glad that it is not going through without some comment being made upon it. It is true that, on the whole, the proposal to raise the general level of Income Tax to 10s. in the £ has been well received in the country. The reason is obvious. With the growing expenditure on the war effort, it is necessary that there should be a growing yield of taxation, and the country is in the mood for sacrifices. It realises that unless we get a greater yield from taxation, our national finance is in danger of being swamped by the whirlwind of inflation. Therefore, the community, as a whole, is willing to bear sacrifices and burdens, but it seems to me that when we get to this abnormal level of taxation, we should bear in mind the whole resources of the community, and have some regard, not only to the income of the individual but also to his capital resources.
My hon. and gallant Friend the Member for Yeovil (Sir G. Davies) said that taxation at this level, constituted a kind of capital levy. It is true that the individual may have to realise some of his capital in order to meet. his Income Tax demands but the point is that that kind of. capital levy is inequitable. It is a capital levy put on to individuals entirely through their incomes. If you contemplate a capital levy, such levy should have regard to the volume of capital possessed by the person taxed. Take the cases of two individuals each of whom has an income of £2,000. One of these may be in charge, say, of one of Lord Nuffield's factories making war material. Such a person might be regarded, for the purposes of the war, as belonging to the salt of the earth. He may have grown up in his business or profession and while having achieved an income of £2,000 a year, he may have no capital resources. On the other hand, the other person's income of £2,000 may be derived from capital resources which have passed down to him and which may amount to as much as £100,000. Those two people pay precisely the same contribution to our war taxation. We should have regard to the question of the capital resources of the individual when we get a level of Income Tax as high as that of the present time.
The hon. Member for East Stirling (Mr. Woodburn) mentioned the same point and put the fact that when we get beyond a certain level of Income Tax it tends to interfere with the productive ability of the country. While everybody agrees that sacrifices must be made, we cannot pass this Resolution without making the comment that if a level of Income Tax at 10s. in the £ is to be part of our system, we may be causing severe injury to our productive processes and interfering with the growth of that virile section of the community which is coming along, which demands higher wages for increased skill and ability, and whose position is being materially sacrificed in these circumstances. I make these comments to the Chancellor because I am sure that in the commercial and industrial world they have great weight.

Mr. Benson: I would like to say a word in reply to the hon. Member for East Willesden (Mr. Hammersley), who, we all know, is an advo-


cate of a capital levy or capital tax. What is the use of discussing it in war-time when our prime concern is revenue which comes out of the spending capacity of the population? A capital tax may or may not be equitable, but it cannot be imposed until the capital of the country has been valued.

Mr. Speaker: We cannot go into the question of the capital levy on this Resolution.

Mr. Benson: Having said that it cannot take place without a capital valuation, I think that I have disposed of it. Both my hon. Friend the Member for East Stirling (Mr. Woodburn) and the hon. Member for East Willesden pointed out the appalling height which taxation has reached. It is now so high that we have to view taxation from a rather more realistic point of view than many of the speeches in the House have tended to do. The acceptance of this high taxation by the House of Commons has been very creditable. I remember a predecessor of the right hon. Gentleman putting 3d. on the Income Tax, and he sat down in absolute silence—an unusual thing after a Budget speech. Hon. Gentlemen apposite were horrified. When the right hon. Gentleman raised Income Tax to 10s. in the £ he was greeted with laughter. We accept this taxation, but it is no use accepting it unless we are prepared to realise how far these proposals are taking us. We are possibly reaching a limit where on certain ranges of income we may get a diminishing return.
We cannot discuss the effect of this rise to 10s. without some reference to the other part of Income Tax, namely. Surtax, because the two go together. When we get Income Tax and Surtax up to 19s. 6d. maximum, and 19s. practically through the whole range of income, we get to a level where we must consider what the effect will be. It is true, as my hon. Friend has said, that it is bound to have some effect upon initiative and incentive. We have been told often enough in this House and in every Debate in the last 30 years on the subject of Socialism and Capitalism, that the only motive that will drive industry is the motive of private incentive. I do not accept that for a moment, but if we have an industry organised on a basis of private incentive, it is a serious matter to interfere with what

is the very mainspring of the industrial system. I do not say that this is the only motive that can be used in human society, but with our present economic system it is the main motive, and a tax of 19s. in the £ is cutting into the root of it. I am not certain that, if this war continues long, we shall not have to extend largely the idea an industry which is not run primarily for profit and not owned by private individuals. That is rather by the way, however, for I want to talk about the question of taxation as such.
This country, probably for a century, has been the most highly taxed country in the world. Our Income Tax has been so effective because it has always been accepted. The main reason why we can tax and have taxed, and why our taxes are paid, is that in our democracy we impose our own taxation, and it has been accepted voluntarily by the taxpayer. When, however, taxation gets to the present height, or even lower, there is a certain number of people, who do not accept it voluntarily. We all know the vast amount of complicated legislation to prevent avoidance and evasion which we have been compelled to pass in the last 10 or 15 years. That has been due to the fact that a certain element have not voluntarily accepted the taxation that has been imposed and have taken steps to avoid it. This refusal to accept taxation was very noticeable after the stiff increases that were put on by the late Lord Snowden in 1929–31 The total increase of tax in the higher ranges of Income Tax and Surtax was then 3s. 3d. The result was that incomes subject to Surtax dropped catastrophically. It may be said that part of the drop was due to the slump. That is so, but not all of it was due to that cause. If we examine the subsequent growth of incomes subject to ordinary taxation and compare it with the growth of that small section of incomes which also pays Surtax, we find that the growth of the total taxable income of the country has been much greater in proportion than the growth of Surtax incomes. Unquestionably steps were taken to avoid the payment of Surtax even when the total Income Tax and Surtax was only 13s. 3d. With the total at 19s. 6d. I do not believe that we shall get Surtax fully paid unless we take further steps along the lines we have been continually compelled to take in the past to make it more and more


difficult to avoid the payment of taxation.
The present 19s. 6d. is not the only impost which is placed by the Government on income. There is the War Damage Act levy, and on some forms of income 2s. is imposed 'for Mineral Rights Duty and mineral welfare levy. Imposts by the Government on certain ranges of income are now more than 20s. in the £, and every increase in a man's income makes him poorer. That is, I will not say a ridiculous situation, but an anomalous situation, and a situation in which we cannot rely upon steady patriotism to carry us through. I am not objecting to this exceptionally high taxation. I am merely querying whether our machinery as it is now constituted is likely to be effective, in collecting it. The man with £150,000 a year from bricks and mortar can give away £110,000 and be better off from the net income point of view with £40,000 a year than with £150,000 a year. He has to give away £110,000 and leave himself with £40,000 before he reduces his Income Tax, Surtax and war damage contribution to less than 20s. in the £. If the income arises from minerals the same thing applies, though not quite so hardly. Here you have income which is a definite detriment, and one has to be extremely patriotic to go on year after year receiving income, which burns a hole in your pocket.
I am not suggesting that taxation should be reduced, but I feel that we ought to realise where taxation has got us to, and I think we shall have to introduce certain safeguards. If we realise that the war is going to last, say, three years, why not let us adapt to Income Tax legislation a clause on lines somewhat similar to one that applies to Death Duties. Hon. Members know that gifts inter vivos are taxable if they have been made within three years of death. Our present taxation is a tremendous incentive to a wealthy man to make settlements upon his children—I do not mean minors, but adult children. If he makes a seven years settlement, he need not dispose of his capital. If he makes a seven years settlement, the income under the settlement passes out of the higher range of taxation. It is a tremendous saving, particularly where a man is supporting his son or daughter

out of his income. I am not saying whether his action is right or wrong, but I am pointing out the motive. Every settlement of that kind will impose a severe loss upon the Exchequer. Moreover, there must be a tendency not merely to make settlements but to dispose of property to children in order to avoid what might be termed negative income which arises from the property, and that would also help in avoiding death duties later.
Is it not possible to introduce some such Clause as this—that during the period of the emergency any transfer of property without valid consideration, or any trust for seven years, shall bear taxation at the rate of income not necessarily of the disponsor but at the higher rate of either the recipient or the disponsor? I make that suggestion became of the possibility of using a seven years' trust to avoid tax if the tax is payable at the rate of the settlor. If it is taxed at whichever is the higher rate, the recipient's or the dis-ponsor's, that difficulty should begot over. I am not blaming people who get rid of negative income, which is a different thing from getting rid of positive income, however small, but I think we shall have to take some step in face of the tremendous incentive, which will tend to grow, to people to get rid of income which makes them poorer.

Mr. Mainwaring: I should like to draw attention to another class of taxpayers who will find it more than difficult to meet the obligations they will be called upon to face under the new Income Tax proposals. I refer to working men who earn by wages £200 a year. The Chancellor has taken steps to impose compulsory saving upon them. The only advantage which the Chancellor will gain is that he will have the use of that money for a given period of years free of interest, for thereafter he is going to return it to them. But what about the capacity to pay of all the individuals in this category? However difficult things may be for the man who is called upon to pay taxation up to 19s. 6d. in the £ at any rate he has a sufficient number of sixpences left to support him. Things are different with the individuals with £200 a year. Many of them have heavy travelling expenses to meet. I am mindful of the difficulties involved, and I do not blind myself to the fact that a large proportion of the population are by choice residing elsewhere than


where they work, but to-day, with the creation of so many new points of production, there is a big redistribution of large masses of working men and women. One cannot go into any county without coming across a large army of men and women who daily have to be transported considerable distances to their work. That involves them in tremendous expenditure. An outlay of 10s. a week is a normal occurrence in the case of tens of thousands of men and women.
Now the Chancellor states that we must compel a person with an income of £200 a year to save some of it, which is a very desirable thing if it is possible and practicable. But take the case of a married man with an income of £4 a week. Of that £4, £1 may go in rent and 10s. in travelling expenses. That accounts for 30s. In addition, the cost of living is mounting week by week, and as a result trade unions feel compelled periodically to make applications for increases of wages. To a man in that position this tax, let it be £5, £10, £15 or £20 a year, is an increase in the cost of living. The Chancellor of the Exchequer is imposing a tax which one wav or other is very unequal in its incidence. One man with £200 a year may live near the place where he works, and another man with a similar wage has to travel 20 or 25 miles to work and pay 10s. a week or more in travelling expenses. The problem cannot be disposed of by saying that many people choose to live where they do not work. I am not concerned about those who choose to live away' from their work, but with the case of the man who is compelled to travel to work, because there is no possibility of his living near his work. With all the new points of production which are being set up in the country, one cannot assume that a man will always find accommodation near his work, because it is not available for him. Transport is therefore unavoidable at every step.
I wish the Chancellor of the Exchequer would most seriously reconsider the factor to which I have referred, because it will affect not only the individuals who have to bear this increased imposition but there will be other effects. I warn the Chancellor now that it will involve trade union practice and negotiations for wages. Speaking as a miner, this must arise. I would regard an increase of Income Tax of £10 or £20 a year as a definite increase in the

cost of living. The Chancellor certainly takes only a loan from my wages until after the war, but what do I get during the period of the war? The Chancellor will take a greater slice of my income than I can afford. Trade unions will therefore be compelled to enter into negotiation for increases of wages because of the increased cost of living represented by this increase of tax. It is therefore reasonable to ask the right hon. Gentleman to consider this matter, with a view to modifying the incidence of the increase of taxation on the lower levels of earned income.

Mr. Hannah: Nobody grudges higher taxation made necessary by the war. It has one advantage, on the basis of realism. The difference between our formerly opposed parties seems to be rapidly disappearing. Nobody could tell from the speeches which we have heard the supposed political allegiance of those who have spoken. I am sorry that my right hon. Friend was not impressed by my efforts to obtain a bachelor tax. Perhaps I was rather keen on the matter, because I imagine that my Division, being almost entirely working-class, has fewer bachelors than almost any other Division in the country. I complain that a considerable number of people with quite large incomes live in flats or hotels and are in such a position that they can pay the extra Income Tax demanded, by drinking water instead of champagne, or something of that kind. It will be easy for them. On the other hand, there are people who can pay the increased Income Tax only by dismissing men whom they employ. It mayor may not be right that great country estates should still be kept up, but it is far more beneficial to the community that gardeners, foresters and people like that should be employed than that money should be spent in towns merely upon living in flats and in other ways that merely concern a single individual.
Very much on the lines of the speech which was made from the other side a minute ago, I would urge my right hon. Friend to consider, as far as possible, the obligations that fall upon the taxpayer. What has to be investigated is how many people are being supported on particular incomes. A difference in treatment should be accorded between a person who has no dependants and whose income is spent entirely on himself, and


another person who may be supporting 20 or 30 individuals, including the children of those who are working for him. I hope that something will be done on these lines. We must take note of the way in which a man has to spend his income, whether he be in the working class or in any other class of the community. Undoubtedly various schemes will be evolved with the object of dodging taxation which is felt to be unfair. In a foreign country some years ago I was speaking about the English Income Tax, and a comment I received was that the English people must be extraordinarily honest folk not to try to evade taxation on such a scale. It was pointed out. that in very few other countries would it be possible. I urge my right hon. Friend to give consideration to the obligations which have to be met by the incomes on which this taxation is imposed.

Mr. A. Edwards: Previous speakers have drawn attention to the double taxation from which some people suffer, and I hope that the Chancellor of the Exchequer will look into that matter. I wish to draw his attention to another danger, in the case of people who are making money in America. When the 100 per cent. Excess Profits Tax was imposed, the best brains in the country were brought to bear upon the problem to see how something could be saved. People who were doing very large business with America put their heads together to see how they could accumulate something of the profits they made, and many ways were considered. I have no doubt that some scheme for accumulating profits there and avoiding taxation here was evolved. There are people in this country who have very large interests in America and who would rather let their capital position increase there than have profits coming to this country on which they would have to pay high taxation. I hope that the Chancellor of the Exchequer will, through his Department, and particularly through the Purchasing Commission in America, carry out a thorough investigation of this position.
I want to put a question to those who are doing business in America and to ask whether there are any delaying commissions. I am certain that, although there may not be agreements, there are many

understandings on the matter. I have in mind people with very large interests in America who are importing and selling in this country. I am certain that they are allowing to accumulatae in America vast sums of money. With very little excuse, some people are sending representatives over there into all kinds of well-paid jobs, taking offices and employing people. I am aware of one instance, although I do not think it will do much harm in this case. The people in question are building up an organisation there at the expense of the British Government which will be very useful to them. Inspectors of taxes have the right to go behind all kinds of arrangements and to refuse to allow certain expenses; I hope that the Chancellor will see that his Department look into this matter from the point of view I suggest. I am sure he will find that in many cases people have agreed to delaying commissions and that staffs are there, receiving some kind of consideration from the higher profit being accumulated in America. The Purchasing Commission should be authorised or instructed to look very closely into this matter. I would ask the Chancellor to consider some methods of taxing capital appreciation in this country. I know the argument against it, that you must set off the costs against it.

Mr. Speaker: This matter cannot be discussed upon this Resolution.

Mr. Edwards: I naturally accept your Ruling, Mr. Speaker, but 1 do not propose that all capital property should be treated as income for the duration of the war. Is that not in Order?

Mr. Speaker: I do not think that would be a straight enough way to get round the fact that the subject is out of Order.

Mr. Edwards: Do I understand from your Ruling that I may not discuss the matter?

Mr. Speaker: That was my intention.

Mr. Edwards: I hope that the Chancellor of the Exchequer has noted that I have been ruled out of Order. Otherwise I should have made a statement. I would emphasise the other point about the American accumulations, and I hope that he will pay attention to it.

Mr. Pethick-Lawrence: I think that not only the House as


a whole but the Chancellor of the Exchequer will agree that we have had a very interesting Debate. As has been said, it has been a Debate that has cut very largely across the ordinary party lines. The only reason for my intervention is that I would like to sum up what has been said. In all the speeches the main agreement has been that with this exceptionally high level of taxation entirely new considerations arise. In the first place it means that certain classes of Income Tax payers will not, and, in fact, cannot, pay their Income Tax out of income, and are forced to pay it out of capital. I will not go further than that, because, if I may say so, Mr. Speaker, you have very properly ruled any further discussions on that matter out of Order. I do feel entitled to say, however, that there must inevitably be a payment of Income Tax out of capital in many cases.
In the second place, my hon. Friend the Member for Chesterfield (Mr. Benson) has wisely pointed out that with this high level of taxation the incentives to evasion are very much greater than they were before, and the Treasury will have to look into this matter and do everything possible to stop evasion. Thirdly, the point raised by my hon. Friend the Member for East Rhondda (Mr. Mainwaring) is a very important one. Whereas people have not bothered about small and necessary expenditure when the rate of tax has been low, they will be forced to deal with that matter now that the rate of tax is high. This question of travelling is certainly one which will have to be very carefully considered, because there may be two people, one of whom has a certain income which is really net income, and the other with an income subject to travelling expenses; it may be possible for a man to get a job near by at one figure and to get a job further off at a higher figure on which he has to pay a certain amount of travelling, and it must be clear that that becomes a serious consideration when the rate of tax is as high as it is. I do not expect the Chancellor of the Exchequer now to say what he is going to do, but I put it to him that the higher the rate of tax, clearly the more essential it is that the administration of the tax should be fair. Therefore, although I do not want him to whittle away the proceeds of taxation, I think he will have to consider being a little more friendly towards Amendments

and concessions for obvious hard cases than he would be if the rate of tax was low. I hope that he will not shut his mind to making concessions which, I hope, will not cut to a large extent into the actual volume of the yield of the tax, but which will relieve it in the cases where it ought to be relieved. I hope that, without committing himself, the Chancellor, with his usual fairness, will say that he will keep an open mind when the time comes when individual concessions may be asked from him during the discussion of the Finance Bill.

The Chancellor of the Exchequer (Sir Kingsley Wood): I am very much indebted to the House for the observations that have been made. As my right hon. Friend has said, it has been a brief, but a well-informed Debate, and I think that what has been said by all my hon. Friends in all parts of the House really reflects the opinion generally of the country on the Budget. One of the observations which I have drawn from what has been said is that no one has said to me as Chancellor of the Exchequer, "You should not have introduced this Budget." No one has said, "You have gone too far ''. What have been addressed to me, quite rightly, have been words of warning that in many respects the limit has been reached, and that when taxation is as high as it is it is important that the administration should be fair and equitable. I also note what has been said about the danger in relation to evasion. I must say that I recognise that the burdens are pressing so heavily upon everyone that it is a matter which the Exchequer must carefully consider if evidence arises, and they must deal with any atttempts at evasion of this kind. In fact, I myself think that at this time evasion is almost doubly an offence, and I hope it will not arise.
I would like to make one or two observations in answer to some of the questions which have been put to me. I hope that my hon. Friend the Member for East Stirling (Mr. Woodburn) will communicate to me the case of the Civil servant who apparently had some increase in his remuneration and was then worse off, but I notice that my hon. Friend slipped in the words" and other circumstances arising out of the war "

Mr. Woodburn: He moved to another town.

Sir K. Wood: No doubt, it will be rather an exceptional case which the hon. Member sends to me.

Mr. Woodburn: The point is that he had to move to another town, and obviously an increase of £50 which was reduced to £25 involves a loss which counteracts any increase.

Sir K. Wood: We can always think of those cases, but I would not like to see it in flaring headlines in the papers tomorrow that the hon. Member for East Stirling put forward a case of a man who was actually worse off on account of the rise in Income Tax despite an increase in his salary.
My hon. and gallant Friend the Member for Yeovil (Sir G. Davies) mentioned how people will undoubtedly have to face very considerable difficulties and hardships arising from the tax. It is also to be noted—and it should be noted in fairness to the Budget—that instances have been given concerning all sections of the community. Complaints in that respect have not been confined to any particular section. I think the counterpart of those considerations is that in imposing the burdens that have arisen from this Budget I have endeavoured to deal fairly with all sections of the community. The fact, of course, is reflected in one way by the fact that many of my hon. Friends have pointed out how various sections of the community will suffer. My hon. and gallant Friend the Member for Yeovil said that voluntary hospitals and other charities will suffer or be inconvenienced in that respect. I comfort myself so far as voluntary hospitals are concerned, because a great proportion of the assistance that they are now receiving, and, in fact, the assistance which has saved so many of them, does not come from subscriptions of large sums of money but from regular contributions which are made week by week by large sections of the community all over the country. Therefore, much as I would regret the withdrawal of subscriptions, I am not so apprehensive in that respect as otherwise I would be. I will take note of the suggestions about the question of double taxation. This, of course, is a matter for mutual arrangement.
My hon. Friend the Member for Westhoughton (Mr. Rhys Davies) raised the

case of people employed in collieries; apparently, from what he said, there are other people engaged with them, rather on a sub-contracting basis. He asked what was. their position. I will look into that and see if anything further can be done, but the view we have taken up to the moment is that in the case of colliery workers who are employed on a sub-contracting basis, tax is not deducted at the source. It is not because we do not believe in it or think it necessary, but because we feel that it might be held unreasonable or impracticable to expect the sub-contractor to assume the burden of keeping the necessary records, which are, of course, essential for the collection of tax. It is really a matter of balance as to whether we ought to impose upon someone in that position the keeping of a lot of books. I made inquiries while my hon. Friend was speaking, and I have been informed that in a good many of these cases Income Tax stamps are bought, which rather eases the position as far as such people are concerned.

Mr. Woodburn: May I offer a suggestion to the right hon. Gentleman? In the case of collieries, it might be possible for the Treasury to make arrangements for some employé of the colliery, say a clerk, to act as adviser to these people, and actually arrange, in an individual capacity, to keep the records and act as agent of the Treasury.

Sir K. Wood: I will certainly explore that suggestion and see if it is practicable. On the one hand one wants to avoid keeping a lot of records, and on the other hand one is confronted with the difficulty occasioned when men receive demands for tax which they might find it difficult to pay all at once.
I am indebted for what my hon. Friend the Member for Chesterfield (Mr. Benson) said. I listened with care and attention, because I heard what he said to me on the last occasion when I introduced a Budget, and if the hon. Members will refer to what he said then, they will see that in many respects I have adopted the suggestions which he made. People often say that I do not take much notice of suggestions, but occasionally I do. He advised me not to hesitate to impose burdens, and he was fair enough to say that they should be imposed all along the line. He did not, as some hon. Members


do on occasions, suggest that one section of the community ought to bear the whole burden while the other is let off. He was quite definite and quite courageous and said that this was the sort of Budget which he himself would introduce, spreading the burden right from top to bottom, except, of course, for the very small incomes. We will study what he has said about the question of tax evasion. As a matter of fact, I am already considering that in connection with the Excess Profits Tax, but there is a difference in that case, because the Excess Profits Tax is one which we regard as being of a temporary nature, arising from the war, and in regard to which we have not always been able to bring in provisions to deal with attempts at evasion. It is only fair to say that, while so far as Income Tax evasion is concerned, people do sometimes have a run, the Inland Revenue, the Finance Act and the House of Commons generally overtake them, and in this connection it may also be observed that in many cases where provision has been brought in to deal with evasion it has been made retrospective. People who wish to evade taxation will therefore have to bear in mind the growing tendency to make such provisions retrospective, "and they will do that sort of thing at their peril.
I will also look into the question of travelling expenses raised by my hon. Friend the Member for East Rhondda (Mr. Mainwaring). It is exceedingly difficult, as my hon. Friends will appreciate, to endeavour to apply the law to particular cases of this character. At the moment, travelling expenses incurred wholly, exclusively and necessarily in connection with employment are allowed —that covers, for instance, the case of the commercial traveler—but not travelling expenses to and from a place of business. I will also note what my hon. Friend the Member for East Middlesbrough (Mr. A. Edwards) said on the question of America and tax evasion there.

Mr. Woodburn: Before the Chancellor leaves the question of travelling expenses, I would like to point out that there are cases in which the Ministry of Labour actually sends a man to special work some long distance away, and it may be almost conditional that he travels backwards and forwards. If it is a condition of employment that he must pay travelling expenses out of his wages, or if he is

allowed travelling expenses by his employer, does not that absolve him from paying Income Tax on the expenses allowed for travelling? If a man's wage is £3 a week, and he gets a job somewhere else which involves the payment of £1 a week travelling expenses, which are paid by the employer, has the man to pay Income Tax on that £ 1 a week travelling allowance, in addition to the Income Tax on his own income?

Sir K. Wood: I am informed that the answer is in the negative.

Mr. Kirkwood (Dumbarton Burghs): Why is it that a commercial traveller is to be in this unique position of being allowed this concession? In my own constituency there are thousands of people who are going to be placed in the position of paying from 9s. to 15s. a week in travelling expenses because of the "blitz." Is any allowance" to be made for that? It is not, by any stretch of imagination, of their own freewill: they have been "blitzed"—bombed out of their homes—and some of them have had to go 45 miles away. Surely the Chancellor of the Exchequer will give some sympathetic consideration to men placed in such a situation.

Mr. Tinker: May I ask the Chancellor of the Exchequer to give us a fuller explanation as to why there is this distinction? I am informed by my right hon. Friend that there is a difference between travelling while at work and travelling to and from work. Would it not be advantageous to make the position clearer?

Sir K. Wood: The present position is as I have stated. I take it that the reason is this: when travelling expenses are so intimately associated with the work upon which a man is engaged, as in the case of a commercial traveller, the law at present is that those expenses are allowed, but, as I have said, the expenses of travelling to and from a place of employment have not up to the present been allowed. The distinction has been made purely because in the case of the commercial traveller these expenses are so wrapped up with the course of his business and employment.
My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) summed up very fairly a good many of


the considerations that have arisen in connection with the Debate. It is obvious that when heavy impositions of this kind are imposed there must be hardship. I think this hardship will be borne cheerfully, because it is essential to victory. One can only hope that it is of a limited and temporary character. I was faced, and every Member of the House has been faced, with the fact that the alternative would be much worse for the great mass of the community, and particularly for—for lack of a better description—the lower sections. If these steps had not been taken, we might have been in for a very serious period of rapid inflation, in which a great deal more suffering would have been inflicted. That is what we have to take into consideration in connection with the Budget Resolutions. I have no doubt that the general opinion of the House will be that the course we have taken, although a very hard one, is the best.

Mr. R. J. Taylor: What commission, if any, is charged for the deduction of miners' Income Tax at the source?

Sir K. Wood: I do not think that any commission is charged in respect of miners or of anyone else. The employers have been doing this work quite voluntarily, and in my Budget speech I expressed our indebtedness to them.

Mr. Woodburn: Are we to take it that the Chancellor will give consideration to the point put by my hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood) about people who are "blitzed" out and involved in undue travelling expenses? Also, where people are transferred by Employment Exchanges or by other means to places far from their homes, will some consideration be given to the question of an Income Tax allowance for their travelling expenses, which are quite separate from their wages?

Mr. James Griffiths: This question of men living some distance from their work is becoming a very serious one. Thousands of people, not only miners, now live a long distance from their work. I think it is a desirable social improvement; people should not be living on top of pitheaps. I add my plea to that of my hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood) to the

Chancellor, to consider the whole matter. With Income Tax operating on very low wages, these payments of 8s. to 12s. a. week in travelling expenses are a very serious consideration.

Sir K. Wood: I will consider the matter. Whether any provision of the kind suggested is practicable is another question. If concessions are made, someone has to pay for them. That is often forgotten. If we are to follow out the principle of the Budget, any concessions made will have to be borne by the country generally. One has to weigh in one's mind whether it is wise to put still further burdens upon the community as a whole.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Third and Fourth Resolutions agreed to.

FARMING.

Fifth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. Benson: This was one of the Resolutions which I welcomed more than any others. At present, the opportunity given to farmers to dodge backwards and forwards between Schedule B and Schedule D puts them in the position that they can practically avoid payment of any Income. Tax whatever. I am not sure how far this Resolution is going until we have the Finance Bill before us, but I hope that the Clause will be a wide and embracing one and that it will put a stop to the avoidance of taxation, which has been permissible hitherto. I am not sure whether every farmer is going on Schedule D—possibly this will apply only to farmers of a certain acreage or rental—but I hope that it will prevent even these farmers coming below the prescribed rental from dodging backwards and forwards between Schedule B and Schedule D in order, primarily, to avoid taxation.

The Financial Secretary to the Treasury (Captain Crookshank): As the hon. Member has said, it will be much easier to discuss this when we have the actual terms of the Bill, but I would point out that this measure was first foreshadowed by my right hon. Friend the Minister of Agricul-


ture in June last, when he announced the crop prices for the 1940 crop; and after that my right hon. Friend the Chancellor of the Exchequer, in reply to a Question in this House in August, said that this provision would be included in the Finance Bill. I merely say that to show that it is not unexpected by the people who are to be caught by the proposal. It is not to apply to all farmers, of course, but only to the larger farmers. The present intention is that it will apply to farmers coming above the limit of £300 annual value. That annual value may not be all in one farm; it will govern the farmers' farming operations in different places, so as to bring farmers more in line with the general system of taxation of trading. I do not think the hon. Gentleman will wish me to take the matter further than that. As I think my right hon. Friend said in his Budget speech, we expect the additional yield of the tax to be £1,000,000 this year, and £3,000,000 in a full year.

Mr. Benson: I would urge the right hon. and gallant Gentleman not to limit the Clause to £300 annual value, at any rate as far as the option to dodge backwards and forwards from one Schedule to another is concerned. That dodging backwards and forwards is primarily for tax avoidance. If the small farmer cannot be bothered to make out the Schedule D return normally, he ought not to have the option of making it out when it suits him and then dodging back to Schedule B.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Sixth Resolution agreed to.

PAYMENTS IN RESPECT OF WAR INJURIES TO EMPLOYE'S.

Seventh Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. Benson: May we have a little more explanation of this rather obscure Resolution?

Captain Crookshank: Certainly. I am at the disposal of the House, and when it is necessary to speak I am willing to do so. This Resolution carries out the proposal which was adumbrated by my right hon. Friend in this House on 18th December, when he made his statement

about the improved Personal Injuries (Civilians) Scheme. The point is that, having made the arrangement—which we are not discussing now—on the personal injuries scheme, the Government came to the conclusion that it was very important that there should not be permissible an allowance for Income Tax purposes on payments which might be made by employers in schemes, whether directly by way of premiums or contributions in regard to war injuries. Where the Excess Profits Tax of 100 per cent, works, if that form of compensation for war damage were to be a permissible charge, it would in fact mean that to a large extent it would be financed by the State, the State having come to the conclusion that the personal injuries scheme should be dealt with by way of State grants. The House will agree that there should be no allowances made if, in spite of the announcement of last December, such schemes have been introduced, or are continuing. It is in order to get over that difficulty that this Resolution has been introduced.

Mr. Hammersley: Am I right in understanding that there is no intention of applying this Resolution to ordinary contributory pensions schemes which are now in existence in so many businesses?

Capt. Crookshank: This deals with war injuries. It says in the Resolution:
No deduction shall be made for payments to or in respect of employés who sustain war injuries or for premiums or contributions under policies, agreements, schemes or arrangements providing for such payments.
It is dealing with the war position.

Question "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

ASSESSMENTS UNDER SCHEDULE A.

Eighth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. Benson: Perhaps the right hon. and gallant Gentleman will also say something about this Resolution?

Capt. Crookshank: This Resolution is to allow Clauses to be introduced into the Finance Bill to strengthen the machinery for the collection of Schedule A, which I am sure is a matter very near to the heart


of the hon. Gentleman, because he has mentioned it in previous Budget Debates. The existing machinery has for some time past, as fie and other hon. Members know, in certain cases, been found difficult, and, of course, the higher the rate of tax, the more serious become the difficulties of collection and of loss arising out of difficulties of collection. The first paragraph of the Resolution deals with what one would have thought was rather a curious point, and that is, that the validity of the Schedule A assessment is sometimes challenged, because in order to be valid at present it has to contain the name of the person who is the landlord. One would have thought that that was not very difficult, but curiously enough, cases arise where that difficulty has to be met. Sometimes it is merely a change of ownership. I daresay that at the moment, with the devastated houses, that difficulty may very easily increase. Sometimes we have had cases where there has been deliberate evasion in tenement buildings, and landlords sometimes conceal their identity by having the properties which they have acquired put into the names of relations or nominees. If that sort of thing happens, the collectors have a great deal of trouble in identifying, and therefore in carrying out, the preliminary necessity of having the name of the landlord on the assessment.
It is in order to deal with that point that we shall propose in the Finance Bill that the tax shall be recoverable from the person who was in fact the landlord of the property on 1st January. If, through one or other of these occurrences, his name does not actually appear on the assessment form, he will be given the opportunity of proving that he is not the landlord. He will be assumed to be the landlord, and it will be for him to prove that he is not. I do not think there is anything of which anybody could really complain in regard to that point.
The second part of the Resolution says:
Further provision shall be made as to the persons from whom and the manner in which tax under Schedule A shall be recoverable.
At present, if you have an unwilling landlord, the means of collecting Schedule A is sometimes unduly laborious, if it is not appropriate to have court proceedings. There is the statutory power of collecting from the tenant, who then deducts any

tax from the rent. In the straight case that is pretty easy, but in the case of large blocks of flats or tenements there is no statutory power for collecting. It is obvious that you cannot get all Schedule A through a named tenant, nor is there any particular reason why you should name the tenants if there are 30 or 40 of them, and this part of the Resolution is in order to bring in some arrangement to cover that point. I do not think that it is necessary now to say exactly what we have in mind, but that is the object of the Resolution. The wording of the third part of the Resolution says that it
shall apply to past and future assessments, for whatever year of assessment.
That is not retrospective taxation. It enables the Revenue to collect tax which has already been assessed, and which has fallen due and ought already to have been paid.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Ninth Resolution agreed to.

EXCESS PROFITS TAX.

Tenth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. Woodburn: I would like to offer a few observations upon this Resolution. I think that the country will have received with satisfaction the decision of the Chancellor of the Exchequer not to reduce the Excess Profits Tax. A great campaign was started claiming that the 100 per cent, should be reduced, and while there may have been some arguments in favour of that, there can be no moral justification in this war for mere dividend-drawers obtaining extra profits out of the war. The question therefore arises as to whether there is any expediency in reducing it, and the main argument adduced is that the profit incentive stimulates greater activity. We must agree that the existence of the 100 per cent. Excess Profits Tax has a tendency to make some people sit back and not exert themselves as they might otherwise do to increase productivity and improve the efficiency of the war machine. That will occur especially when the people concerned with the ownership of the shares and the property are in control of the management. Where


the management is separate from the ownership of the firm, the tendency will not exist to the same extent.
The other argument is that the profit incentive tends to cause waste. It is perhaps in this regard that the greatest danger arises from the 100per cent. Excess Profits Tax. As a member of the Select Committee on National Expenditure, I naturally have received complaints from Members of waste which has been brought to their notice, and the House will be surprised at the number of cases in which workers who are employed in camps and in factories have complained to their Members of Parliament about money being poured out in a wasteful fashion where they are employed. I myself have had complaints from workers that though they have been paid their wages, they have been given nothing to do. I have had complaints from owners of works, and workers in factories, about certain firms which have induced men to go to their works, have asked them to look as busy as possible, and have paid them overtime for doing nothing. That, at first sight, may seem quite unjustifiable, but there are certain explanations. At one firm of this kind the case of which I investigated, I found that production had been held up for want of a part, which meant that the firm was faced with the alternative of disposing of workers or paying them for doing nothing.
In other cases, however, there is no question that there has been unjustifiable waste. Some of these cases have been reported to the House by the Select Committee on National Expenditure. I want to make it clear that the workers in this country do not want to be paid for doing nothing and that they themselves are as indignant about this kind of thing as anybody could be. In this connection one disadvantage arises. It has been shown clearly, that the action of firms, who pour out money in wasteful fashion by offering people anything they like for the work they are to do, brings into contempt, in the mind of the worker, the whole of the Chancellor's appeals for economy and avoidance of waste. It strikes them that there is something wrong with the machinery of Government when firms are obtaining such prices for goods that they can afford to throw away money. The 100per cent. Excess Profits Tax has given some excuse, because anything

firms accumulate beyond the standard profits goes to the Government, and obviously the Government are paying for it.
The Government, I understand, are keeping a strict eye on the question of firms using revenue to build up capital appreciation. In the last war some pits, during the period of control, were able to fit themselves out with most up-to-date machinery. When the war was over and control disappeared, this was brought in as depreciation of capital and a great issue of bonus shares took place. I am satisfied that the Government are doing their best to keep a strict eye on this matter but there are cases in which that strict supervision is actually having a disadvantageous effect. My hon. friend the member for Dumbarton Burghs (Mr. Kirkwood) explained that in his constituency certain workers were suffering from the effects of the recent "blitz." It is true that the normal way of life has in many cases disappeared from there and therefore, there is a necessity of creating the communal kind of life that is only possible where canteens are established. I understand that one of the large firms there put forward as a reason for not building a canteen the statement that the Government would not allow them to build or run a canteen out of their excess profits. If that is the case I suggest that while it may be selfish and reprehensible on the part of the firm to do such a thing, in the circumstances there should be some relaxation in that respect if that is the only way in which canteens can be obtained. In many cases we have to submit to expediency. It is wrong to bribe people during a war but it may be the only way in which we can get things done and, therefore, however immoral it may be from one standpoint, from the point of view of getting the job done the Chancellor might take that into consideration.
If you abolished the profits of dividend-drawers it would not necessarily produce one extra screw, because people drawing dividends are not taking any part in the productive work of the country. Workers have been given piece-work and bonuses and while people might think that some other methods should be adopted to increase production I, and others who have had long experience of industry, think


that no other method could produce such an intensity of production and such carefulness as this method. If a man is paid for producing goods in the proper fashion and with proper accuracy, and by some inducement he produces more, then there is no question of the efficacy of the method. But in many cases there is no inducement at all to the people who run businesses and to draftsmen, technicians and those responsible for improvements in design and methods. The 100 percent, duty may mean that owners of businesses will discourage managements from taking any steps to improve the efficiency of war production if such is likely to reduce the potentiality of that firm for profits after the war.
If extra profits are not to improve production the Chancellor might consider some method of allowing, as part of the expenses of industry, bonuses to men who are running the management side. and in many cases are working 18 to 20 hours a day. I gave an example in an earlier Debate of one such man who is now in the' service of the Government in a voluntary capacity. By his ingenuity he actually made it possible to produce, during this war, shells at a rate that would not have seemed conceivable during the last war. Less than one-tenth of the time taken during the last war is now spent on machining and fitting. If a person is doing that kind of work, there should be some recognition of it in some form or other, although I am perfectly certain that this man did not do. it for personal gain. Some people, however, sit back because they are getting no inducement. The Ministry of Supply has the responsibility of maintaining the efficiency of industry and it can only do that by recruiting a sufficient number of inspectors to check industry throughout the country. The Minister places thousands of contracts during a month and it is a physical impossibility for a Government Department to deal not only with the inspection of contracts but with the question of the efficiency of all the firms.
Therefore, whether we like it or not, we are thrown back on the fact that we must rely on the industrial organisation which exists at present, and must make it work to the best of its ability and raise itself to the maximum efficiency. In considering the whole question of excess profits, I

would like the Chancellor to go very carefully into the relationship of the 100 per cent. Excess Profits Tax to efficiency in industry. There is no question that in some places there is slacking. In one case of which I know, some of the big combines have actually deterred and prevented to some extent the bringing in of highly efficient firms from outside simply because the big firms are more concerned with what is to happen to them after the war than with the prosecution of the war. It is a great disadvantage if all the inducement that is provided to industry is that they must hope for their profits after the war. Undoubtedly this causes the combines to give their attention not to finding the best methods of producing for the war, but to finding the best methods of evading their responsibility during the war and building up for themselves a favoured position in order that after the war they may scoop the market.
This is a conflict of interests for which I cannot see a remedy, but if I were to name any one thing that handicaps our production at this time more than anything else, I should say that it is the question of many firms and great organisations sacrificing what they could do now in order to safeguard their position after the war. This is the one thing, as far as my observations go, that has played the biggest part in retarding our production, and it is a matter in which the 100 per cent. Excess Profits Tax is very much involved. I think the Excess Profits Tax may have to be carried on for a considerable period-after the war, and if firms realised that, they might get down to the job now, and not be so much concerned about the future.

Mr. Tinker: My hon. Friend the Member for Stirling and Clackmannan, East (Mr. Woodburn) said he was pleased that this Resolution did not mean any reduction in the Excess Profits Tax. If I have read the Budget statement correctly, there is to be a reduction of 20 per cent, at some time or other. The wording is somewhat vague, but behind it there is the purpose that at some later time the people who are now paying 100 per cent. Excess Profits Tax will get back 20 per cent. This concession is made because it has been found that these patriots, the men of business who have controlled the affairs of the country for some time, feel


now that they ought no: to pay away 1oo per cent, of their excess profits, and if the Government insist on that, they adopt some other means of getting their own back. My hon. Friend spoke about waste. That is one of the various means these people are adopting. They are blackmailing the Chancellor by saying that they will retard production unless he does something for them, and that they will do what they can to get the money back, irrespective of what may happen to the war effort. I had expected some thing different from that. It was my opinion that the Government did a very good thing for these people when they adopted, after negotiations, the standard years of 1935, 1936 and 1937 as being a fair period —

Mr. Deputy-Speaker (Colonel Clifton Brown): Before the hon. Member goes further, I think that any reduction of the Excess Profits Tax is not within the terms of the Resolution. Surely, it is not a matter which can be debated now. Perhaps the representative of the Treasury could give some guidance on that matter.

Captain Crookshank: I do not think that arises here. I quite agree that this Resolution leads up to various Amendments of the law relating to the Excess Profits Tax which we propose to make in the Finance Bill, but I am very much in your hands, Colonel Clifton Brown, as to how far we can discuss the tax itself.

Mr. G. Macdonald: Since this Resolution presupposes a continuance of the Excess Profits Tax in some form or another, would we not be entitled, in discussing the Resolution, to make some reference to that point?

Mr. Benson: The Resolution begins by saying "that the extent and incidence of Excess Profits Tax½" Surely, whether the Excess Profits Tax is 10 per cent. or 100 per cent, is a matter of its incidence and its extent. It seems to me that, as the extent and incidence are to be varied, it would be in order to raise the question of the rate of the tax.

Captain Crookshank: I should have thought that the governing words were the rest of the Resolution—"shall be varied so as to give effect to amendments.½" I think it is within that variation that the Debate would lie.

Mr. Deputy-Speaker: It seems to me that the broad principle is that when reductions of taxation are made they do not require Resolutions, and, therefore, are not debatable on the Report stage except in so far as they are set out. These Amendments are not necessarily reductions.

Mr. Tinker: I am entirely in your hands, Colonel Clifton Brown. I take the Resolution to mean that in some way or other something will be given back to the employing classes after the war. If that were not the case, there would be no reduction and the tax would remain at 100 per cent., and there would be no trouble on that point. I want to argue on the lines of why the change has been made. The position we are in when we are defending the Budget in the country— which I do, on the whole, because I think it is a good one—is that we are asked why, seeing that the limit for Income Tax has been lowered so as to bring in more workers, we are allowing very rich people to get away with excess profits. Before the Budget was introduced, 1 knew that attempts were being made by many interests to get the Chancellor to make a reduction in the Excess Profits Tax. The Government have no right to alter the position with regard to the Excess Profits Tax simply because of such pressure. If people adopt the means which they are adopting to defeat the end which the Chancellor has in view, those people ought to be dealt with accordingly. I take it that the sum of money that will accumulate out of the 100 per cent, tax will be tabulated, and that at the end of the war certain money will be handed back to those people who can prove that they have a right to it.

Mr. Deputy-Speaker: There the hon. Member is quite definitely raising a subject which is not in Order on the Resolution. It is quite beyond the scope of the Resolution now being debated.

Mr. Tinker: I bow to your Ruling, Colonel Clifton Brown, and will not say any more, except that I oppose the Resolution.

Mr. Ellis Smith (Stoke): On a point of Order. If we allow this Resolution to pass to-day, does it commit the House to the proposal, which was made in the Budget statement, and will be raised in


the Finance Bill? We want your guidance, Colonel Clifton Brown, on this, because some of us feel very strongly about it, and wish to record our protest against a proposal of this character. If you rule that the passing of this Resolution will not commit us to that proposal, some of us are prepared, at this stage, to allow it to pass, but if you rule that, by doing so, we commit ourselves to the Chancellor's statement, and the proposal will be introduced in the Finance Bill, some of us will be forced to take the same line as the hon. Member for Leigh (Mr. Tinker).

Mr. David Adams: Will it be in Order to"discuss the general question of the 1oo per cent. Excess Profits Tax?

Mr. Deputy-Speaker: No, I think that that would be out of Order on this Resolution. This Resolution deals with three amendments of the law, labelled A, B and C, and the whole subject of the Excess Profits Tax would not be in Order at this stage. In answer to the hon. Member for Stoke (Mr. E. Smith), I cannot see how this Resolution binds the House to the general subject of the Excess Profits Tax. When the Finance Bill comes in, no doubt there will be Clauses in it which can be rejected or accepted by the House as it chooses, and the House will be absolutely free to discuss the question of the imposition of 80 per cent, or 100 per cent. tax.

Mr. J. Griffiths: This is a question which, we know, is very much in the minds of the public. I thought the discussion was "Brought within the Rules of Order by the inclusion of the words "the avoidance of tax." We have recollections of the kind of efforts which were made during the last war to defeat the objects of a similar tax, and to prevent the money being collected by the State and becoming public revenue. I have in mind examples of palatial offices—I pass one of these every time I go home— which were completely unnecessary, and were built almost entirely for the purpose of avoiding the payment of Excess Profits Duty. There are all kinds of dodges of that kind about which we have heard. To-day we are living in a new generation, and are more aware of the sort of things which took place during the last war. Although I belong to that generation, I must point out that very great attention will be paid to these

matters. As I said, I thought the discussion was covered by the inclusion of the words "the avoidance of tax." We know these methods of avoidance involve all kinds of fancy schemes. Therefore, I think it will be of interest to the House and the country to know from the Government what steps are being taken to see that in this war, as distinct from the last, the tax is not dodged and avoided in the same shameful way.

The Financial Secretary to the Treasury (Captain Crookshank): Perhaps it would help the House, as you, Mr. Deputy-Speaker, have ruled that we cannot discuss the Excess Profits Tax issue, if I briefly explained what these Resolutions are about. Hon. Members could then see whether they really wished to discuss them. This Resolution deals with two or three very technical points which, in the Finance Bill, are bound to be discussed. There will obviously be opportunities later on for hon. Members to discuss particular points on the relevant Clauses of the Finance Bill. They may, if they wish, even have an opportunity" of discussing them on the Second Reading of the Bill. This Resolution is merely for the purpose of altering the law in regard to certain technical points. I do not think, taking the first Resolution, that the particular abuse, which the hon. Member for Llanelly (Mr. J. Griffiths) has in view, of the erection of palatial offices is likely to occur, because at present we have the most strict control over all building operations.

Mr. J. Griffiths: That may be so, but there are other gaps.

Captain Crookshank: That is the gap the hon. Member instanced. The present order is that nothing over £100 can be spent by way of repairs or building without a licence, and I can assure the House that my Noble Friend in charge of that Department will keep watch on that particular aspect. The first part of the Resolution is in connection with the proposal for the alteration of the principle of the treatment of borrowed money in the computation of capital and profits. Of course, if there are any possibilities of avoiding the tax, we shall stop them up. A few devices have come to our notice and we propose to deal with them. Apparently it is possible that some artificial arrangements may be made, such


as the amalgamation of businesses which have no natural affinity, the purpose of which is to reduce the excess profits made by the prosperous business by setting them off against the deficiencies suffered by the less prosperous business. I think the way to describe that is "buying a standard." It is proposed to introduce a specific provision to deal with any such arrangements.
Another conceivable instance is that of a director of a director-controlled company owning more than 5 per cent, of the shares. His remuneration, as a consequence, is disallowed in computing the company's Excess Profits Tax. It is conceivable that he might transfer some of his shares to his wife to reduce his holding to less than5 per cent. Hon. Members may find two or three other devices have emerged, but they will be dealt with. Then a small technical alteration is required in regard to interconnected companies in regard to the chargeable accounting periods. It will be necessary to provide there for some apportionment of the profits and standards in cases where the chargeable accountable periods of these are partly before and partly after March, 1940.The reference to the relief with regard to deficiencies and profits to be given in parts of His Majesty's Dominions outside the United Kingdom is only to correct some drafting powers; but we have to take the powers in the Resolution. With regard to paragraph (b) that is an arrangement for concentrating industry and deals with the same point as was dealt with in the Sixth Resolution. Paragraph (c) deals with the point which I explained just now with regard to the Seventh Resolution. They are all important points but they are not of the same calibre as the general issue of the maintenance of the Excess Profits Tax at 100 per cent, or otherwise.

Mr. Kirkwood: While thanking the Financial Secretary for his explanation, I wish to raise a matter which was mentioned by the hon. Member for East Stirling (Mr. Woodburn). It is most interesting that the point should be raised at a moment when the Minister of Labour is in his place The point I wish to raise relates to canteens for the shipyards on the Clyde —

Mr. Deputy-Speaker: I ought to have stopped the hon. Member for East Stirling

(Mr. Woodburn) when he mentioned that point. I do not think we ought to pursue it because it does not fall under any of the headings, A, B or C.

Mr. Woodburn: Is it not the case, that while this Resolution does not specify all the things which could have been adjusted in connection with the Excess Profits Tax, it is in Order to discuss what is missing from the Resolution as well as what is in it?

Mr. Deputy-Speaker: One cannot discuss what is not in the Resolution. The Resolution aims at raising more money, and what the hon. Member proposes would raise less.

Mr. Gallacher: I am somewhat uneasy about one point in the Resolution. It starts off by saying:
The incidence shall be varied so as to give effect (a) to amendments as to standard profits.
I am very much in favour of amending the standard profits. As a matter of fact I would reduce them until they disappeared altogether, but I am told if you do not give the incentive of profit, the ruling class, the employers, will sabotage industry. If they will sabotage because of 100 per cent, excess profits, what will they do if we reduce standard profits?

Mr. Deputy-Speaker: I am afraid the hon. Member is discussing the subject as a whole. This is a very limited Resolution. The hon. Member must confine himself to the explanation that has been given by the Financial Secretary.

Mr. Gallacher: I am dealing with these two proposals as to standard profits. I am suspicious that the intention is to enable them to increase standard profits. I want to see them reduced. If I argue against the standard profits being increased, they will say to me, "If we are not in a position to increase standard profits in certain cases, the employers will sabotage industry." The hon. Member for East Stirling (Mr. Woodburn) has a remedy. He says, "Get inspectors." What is the use of inspectors? The firms get to know when the inspector is coming round and polish up the place and everybody is told to look busy. If the intention is to increase standard profits I shall vote against it. The Minister of Labour will tell you that one guarantee against


the sabotaging of industry is to get a powerful, well-organised body of independent shop stewards. The hon. Member for Dumbarton Burghs (Mr. Kirkwood) was a foreman in a factory and he had the finest body of "Red" shop stewards that it was possible to get.

Mr. Deputy-Speaker: A discussion on shop stewards would be out of Order on this Resolution.

Mr. Gallacher: I thought I should be in Order in showing an alternative to increasing standard profits. The hon. Member for Dumbarton Burghs has a record of production. His shop stewards organisation did the job. I should like to be informed whether this proposal is being put forward in order to provide the Government with an opportunity of increasing standard profits and encouraging the robbers and saboteurs.

Sir K. Wood: I think the answer to the hon. Member is that, if this was not proceeded with, he would not be able later on to move an Amendment to the Finance Bill in the sense that he desires.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Eleventh Resolution agreed to.

POWER TO BORROW FOR CERTAIN FINANCIAL PURPOSES

Twelfth Resolution read a Second time.

Motion made, and Question proposed,
That this House doth agree with the Committee in the said Resolution.

Mr. David Adams: Might we have some more detailed explanation than is shown in the Resolution?

Captain Crookshank: It is a Resolution dealing with the National Loans Bill, which had its Second Reading yesterday.

Question put, and agreed to.

REPORT [9TH APRIL]

First Resolution:

AMENDMENT OF LAW.

That it is expedient to amend the law relating to National Debt and the Public Revenue, and to make further provision in connection with finance.

Further considered, and agreed to.

Bill ordered to be brought in upon the said Resolution by the Chairman of Ways and Means, the Chancellor of the Exchequer, and Captain Crookshank.

FINANCE BILL,

" to grant certain Duties, to alter other Duties and to amend the law relating to the Public Revenue and the National Debt and to make further provision in connection with finance," presented accordingly, and read the First time; to be read a Second time upon the next Sitting Day, and to be printed. [Bill 24.]

Orders of the Day — NATIONAL LOANS BILL.

Considered in Committee

[COLONEL CLIFTON BROWN in the Chair.]

CLAUSE 1—(Further provision for raising money.)

Motion made and Question proposed, "That the Clause stand part of the Bill."

Mr. Ellis Smith (Stoke): May I ask for your guidance, Colonel Clifton Brown, on this point? My hon. Friends and I have two Amendments down, and it will facilitate discussion if we are allowed to take them together.

The Deputy-Chairman: I am afraid both Amendments are out of Order, being outside the Money Resolution which we have passed.

Mr. E. Smith: The Amendments raise a point which, as far as I have been able to find, has not been raised before. In view of your Ruling, Colonel Clifton Brown, I propose to speak on the Question, "That the Clause stand part of the Bill." I shall divide the Committee on this, because it is an important matter. I understand that the 1930 Act is the Act upon which this Bill is based, and I want to draw attention to the 1919 Act upon which in turn the 1930Act was based. It gives the Treasury powers for borrowing similar to those which applied in 1900, 1902 and 1914–18. Great changes have been brought about since that period. We have mechanised and modernised the Army, and, in our view, it is time that our methods of raising finance were modernised. It is for that purpose that we put down the Amendments which have been ruled out of Order, and' for that reason we intend to oppose Clause I. Section I of the principal Act states that the


Treasury may borrow as they think fit on the security of the Consolidated Fund. We contend that it is the duty of this Committee as representing the nation to see that the Treasury carry out the powers which the principal Act gives to them. That is not being done now.
Why should the Government, which represents a nation, pay the banks to lend them the nation's own credit? Why cannot the Government raise their own credit on the security of the Consolidated Fund as the Act lays down? Because of what has taken place in the past we on this side feel strongly upon this matter, and many Members on the other side, had they known this question was coming on, would have shown that they felt strongly too. In war time, in order to encourage people to save and to reduce unnecessary consumption, it is sound policy to secure the maximum sale of National Savings Certificates. In that case the payment of interest is justifiable, but there is no justification in these days for the continued payment of interest to the extent of millions of pounds on bank-created credit. Had our Amendments been adopted the nation would have been able to save millions of pounds which are now being paid out in unnecessary interest on bank-created credit. In his Budget statement the Chancellor made reference to the work of the Select Committee on National Expenditure. I have read every report of that Committee and I want to join in paying tribute to the great contribution the Committee has made to the war effort. At the same time, however, we continue to adopt Victorian methods of obtaining our own credit. We say that we ought to obtain it on the security of the Consolidated Fund. The time has arrived when the Government ought to grant themselves credit by vote of Parliament and on the nation's security.
The Lease and Lend Bill is a new idea, and wherever I have gone I have found that people in all walks of life have welcomed it. Surely it is a logical step to take for us to adopt similar unorthodox methods in this country. The situation is so serious that we cannot continue Victorian methods of raising credit. The National Debt is now £11,394,000,000, according to the final statement presented to us in the Budget Debate. The interest alone on that debt will cost the nation £250,000,000 a year. I suggest that as a

result of the last Resolution we have passed we shall not be able to ascertain in future what we are really paying out in interest on the National Debt. If I understand the Resolution correctly, it will mean that in future when blue papers are placed before us on Budget Day, we shall not be able to ascertain, to the same extent as in the past, what interest we are paying on the National Debt. The creation of our own credit would be an unorthodox step of a progressive character.
The Government are very gradually mobilising the whole resources of the country, and that provides support for my next point. The minutes of the Macmillan Committee stated that the creation of credit or loans by banks is the creation of power to employ labour, and that, therefore, the only limit is the amount and quality of unemployed labour. As a result of the great effort which is being made by the Ministry of Labour hardly any unemployed are left, and there was never a more opportune moment for introducing the unorthodox progressive step that we suggest, which is of the same kind as that which has been introduced in America. Section 3 (a) of the principal Act contains the words,
charging on the Consolidated Fund any remuneration payable to the Bank of England in respect of the management of securities under the Act.
I would like to ask what is the total amount that has been paid to the Bank of England for managing these securities since 1939. Why cannot the Treasury themselves manage the securities which have been taken over in order to assist us in financing the war? To borrow the genuine savings of the people is sound in war time, but to pay others to grant us our own credit is out of date and mid-Victorian. We were desirous of moving the Amendments which have been ruled out of Order in order to alter that and to save the nation millions of pounds. As a result of the trade union movement spending thousands of pounds in educating young men, more and more of them are getting a grasp of economic and financial questions. Too long have the people of this country been exploited in this way and too long have we been prepared to accept Victorian ideas. Everything in life is being speeded up and modernised. The Army, Navy and Air Force have been modernised, and we should take the


logical step of modernising the methods of raising our own credit. In these serious times the Committee should be prepared to consider a reasonable step of this kind.

The Financial Secretary to the Treasury (Capt. Crookshank): As there are pretty well the same Members here now as when I last spoke, may I be allowed to say that when I said that the last Resolution which we took in the House was concerned with this Bill I was in error. I was looking at the one below on my Paper, which had already been passed, I apologise to the House most humbly for the error which I made. What that Resolution did refer to was borrowing, as my right hon. Friend said in his Budget statement, as regards the Sinking Fund. If any hon. Member was misled by what I said I am very sorry, and I hope he will see my correction now.
On this Clause the hon. Member for Stoke (Mr. Ellis Smith) seems to be raising the whole question of our financial policy and our borrowings both now and in the years since the last war. If I may respectfully say so, it is a very interesting topic, but the Clause itself is a narrower one. It is the one by which we are taking power for borrowing this year. It does not deal with the conditions, but merely makes it possible for us to borrow, and, as I said yesterday, it is limited, as was the first National Loans Act to the amount of Supply which would be granted during the year. You cannot borrow more than the amount of Supply voted, plus, as the last word says, £250,000,000. It is necessary to ask Parliament for a little more than the Supply, because with the difficult system of financing through Votes of Credit as well as taxation one cannot be sure of one's dates with the particularity which is possible in peace-time, and that is why we have to ask for a margin. That is all that this Clause is concerned with, the power to raise money. If at any time hon. Members wish to bring before us various conditions which they think ought to be inserted in our borrowing powers, they can find opportunities for calling attention to their suggestions by means of Questions, or by Debates devoted to that purpose, but this Clause merely enables the Government to borrow this maximum.

Mr. Pethick-Lawrence: We have had a very interesting point raised by my hon. Friend the Member for Stoke (Mr. Ellis Smith), and it is one to which I think we do right to pay attention, but I would submit to him that it would be a little unfortunate if he were to Divide the Committee on this particular Clause, because it says nothing about the raising of the money, nothing about whether it is raised on the credit of the nation or from the banks or individuals, and a vote against this Clause might be construed, really, as a vote against the war effort.

Mr. E. Smith: I want to assure my right hon. Friend and the whole Committee that there is no intention of that kind behind my remarks. I want to make that quite clear. In addition to that, may I draw attention to the fact that Section 1 of the principal Act speaks of the power of the Treasury to raise money, and states that it shall include the power to raise any money required for any Supply, and later it adds:
and in addition a sum not exceeding £250,000,000.
Now surely upon that Section the question of raising money under the principal Act arises, because you cannot construe this Clause without reading the principal Act. I have read the principal Act, and if I understand it correctly it is the principal Act that gives the Treasury power to borrow in the way they are doing; and in my view it is time they borrowed on the basis of the principal Act, that is, on the Consolidated Fund.

Mr. Pethick-Lawrence: My hon. Friend has made another speech along the same lines as his earlier speech, but it has not changed my view in the slightest. I was very careful not to suggest for a moment that my hon. Friend was desirous of crippling the war effort. I quite appreciate that, and should not attribute any such improper motive to him. But what I did say, and I think it is correct, is that people who did not know the integrity of my hon. Friend, and people who did not happen to listen to his speech, might construe a vote given against this Clause as a vote given against the war effort. I think that is indisputable, and therefore J think it would be very unfortunate if he decided to Divide the Committee. With regard to his reference to the principal Act, my hon. Friend is not seeking to


repeal the original Act and to substitute something else. I do not know whether he could have framed an Amendment that would have conveyed his meaning, but the particular Amendment which he did frame, which no doubt conveys meaning as far as it could, has not passed the Chair, and for that, of course, none of us is responsible.
I would remind my hon. Friend that my hon. Friend the Member for Leigh (Mr. Tinker), whose name was also down to the Amendment, but who has not spoken on the Question of the Clause standing part, succeeded recently in getting a very substantial modification introduced into our legislation dealing with finance. I think the Chancellor of the Exchequer was most forthcoming on that occasion when, in accordance with a proposal made by the hon. Member for Leigh, he did make a very substantial alteration in a Measure which was in time-honoured form. Had my hon. Friend who has raised this matter on the Question of the Clause standing part been able to move his Amendments then, whether one agreed with him or not, at any rate his action could not have been misunderstood. Put, those Amendments being out of Order, to propose to vote against the Clause itself, in which the point really does not arise, would be rather unfortunate, and I hope he will not do it, because—he did not bring the matter to the attention of myself or any of my hon. Friends who are likely to take part in this Debate—I should have to ask those who sit on these benches to vote against him and to ask for the Whips to be put on. I hope my hon. Friends will not put me into that awkward position, because I do not want to quarrel with him on this matter. It would, however, be very unfortunate if any large body of Members were to be counted in the Lobby against the Clause, which simply says that he Treasury shall have power to borrow for the prosecution of the war such sums as may be required plus the extra £250,000,000. Therefore I do hope that this Clause may be carried without our having to go to a Division.

Mr. Gordon Macdonald: There is no intention to Divide the Committee on the Question of this Clause standing part, that is certain, but my hon. Friend the Member for Stoke (Mr. Ellis Smith) has felt ever since this Budget was introduced that the question which he has brought forward ought in some way to be raised. He himself was advised that it could be raised on this Clause. He asked me whether I would attach my name to his Amendment and I am always willing to help him, because I know he is always seeking to improve things, but when the Chairman decided that the Amendment was not in Order we never had any intention of Dividing the Committee against the Clause itself. That would be utterly ridiculous. At the same time I should like to say to my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) that I feel he might have left some of his remarks to be addressed to us by somebody on the other side of the Committee. After all, we do not wish to act in a ridiculous manner, and he knows that. My hon. Friends the Members for Leigh (Mr. Tinker) and Stoke-on-Trent felt that this matter ought to be brought to the attention of the House as soon as possible. However, if this is the wrong occasion we shall seek some other occasion.

Question, "That the Clause stand part of the Bill," put, and agreed to.

Remaining Clauses ordered to stand part of the Bill.

Bill reported, without Amendment; to be read the Third time upon the next Sitting Day.

Orders of the Day — CHARTERED AND OTHER BODIES (TEMPORARY PROVISIONS) BILL. [Lords.]

Considered in Committee; reported, without amendment; read the Third time, and passed., without Amendment.

Orders of the Day — ADJOURNMENT..

Resolved, "That this House do now adjourn."—[Mr. Munro.]